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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
(Alexandria Division)
BLUE FLAME MEDICAL LLC,
Plaintiff,
v.
CHAIN BRIDGE BANK, N.A., JOHN J.
BROUGH, and DAVID M. EVINGER,
Defendants.
Civil Action No. 1:20-cv-00658
CHAIN BRIDGE BANK, N.A,
Third-Party Plaintiff,
v.
JPMORGAN CHASE BANK, N.A.,
Third-Party Defendant.
THIRD-PARTY PLAINTIFF CHAIN BRIDGE BANK, N.A.’S
MEMORANDUM IN OPPOSITION TO THIRD-PARTY DEFENDANT
JPMORGAN CHASE BANK, N.A.’S MOTION FOR SUMMARY JUDGMENT
May 20, 2021
ROBBINS, RUSSELL, ENGLERT, ORSECK
& UNTEREINER LLP
Gary A. Orseck (admitted pro hac vice)
Matthew M. Madden (admitted pro hac vice)
Donald Burke (VA Bar No. 76550)
2000 K Street, N.W., 4th Floor
Washington, D.C. 20006
Tel: (202) 775-4500
Fax: (202) 775-4510
dburke@robbinsrussell.com
Counsel for Third-Party Plaintiff
Chain Bridge Bank, N.A.
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TABLE OF CONTENTS
Page
Introduction ..................................................................................................................................... 1
Counterstatement of Undisputed Facts ........................................................................................... 2
A. Events Prior To JPMorgan’s Cancellation Of Its Payment Order ............................ 2
B. JPMorgan’s Cancellation Of Its Payment Order ....................................................... 7
C. Additional Materials Facts (JPMorgan’s Claim Against California) ...................... 11
Argument ...................................................................................................................................... 12
I.
JPMorgan Is Not Entitled To Summary Judgment On Chain Bridge’s
Indemnification Claims (Counts I and II)12
A. Section 4A-211(f)’s Indemnification Provision Applies Here ................................ 13
B. There Was No Agreement Between JPMorgan And Chain Bridge That
“Otherwise Provided” That JPMorgan Would Not Indemnify Chain Bridge ......... 20
C. Chain Bridge’s Legal Expenses, And Any Judgment That Blue Flame
Obtains, Are A Result Of JPMorgan’s Cancellation Of Its Payment Order ........... 21
II. JPMorgan Is Not Entitled To Summary Judgment On Chain Bridge’s Unjust
Enrichment Claim (Count III) ........................................................................................ 23
Conclusion .................................................................................................................................... 25
TABLE OF AUTHORITIES
Cases:
Page
Anderson v. Fluor Intercontinental, Inc.,
No. 1:19-cv-0289, 2021 WL 837335 (E.D. Va. Jan. 4, 2021) ...........................................24
Banca Commerciale Italiana, N.Y. Branch v. Northern Tr. Int’l Banking
Corp., 160 F.3d 90 (2d Cir. 1998) ...............................................................................17, 18
Bernardini v. Cent. Nat’l Bank of Richmond,
290 S.E.2d 863 (Va. 1982).................................................................................................24
Daniels v. Twin Oaks Nursing Home,
692 F.2d 1321 (11th Cir. 1983) .........................................................................................22
Smith v. Schlage Lock Co.,
986 F.3d 482 (4th Cir. 2021) .............................................................................................22
Terry v. Bank of Am., N.A.,
350 F. Supp. 2d 727 (W.D. Va. 2004) ...............................................................................24
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Cases—Continued:
Page
White v. Johns-Manville Corp.,
662 F.2d 243 (4th Cir. 1981) .............................................................................................17
Regulations and rules:
Uniform Commercial Code:
§ 1-103(b)...........................................................................................................................17
§ 4A-209(b)(2) ...................................................................................................................13
§ 4A-210(d) ........................................................................................................................14
§ 4A-211(a) ..................................................................................................................14, 15
§ 4A-211(b) ........................................................................................................................14
§ 4A-211(c) ........................................................................................................................21
§ 4A-211(f) ................................................................................................................ passim
§ 4A-211 cmt. 5 ...........................................................................................................16, 17
§ 4A-403(a)(1) ...................................................................................................................13
§ 4A-403 cmt. 1 .................................................................................................................13
12 C.F.R.
§ 229.16(a) ...........................................................................................................................4
§ 229.17................................................................................................................................4
§ 229.18(e) ...........................................................................................................................4
Other Authorities:
Press Release, Board of Governors of the Federal Reserve, Federal Reserve
Actions to Support the Flow of Credit to Households and Businesses (Mar.
15, 2020), https://perma.cc/PU6C-2GYY ............................................................................3
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Third-Party Plaintiff Chain Bridge Bank, N.A. (Chain Bridge) submits this memorandum
in opposition to the motion for summary judgment filed by Third-Party Defendant JPMorgan
Chase Bank, N.A. (JPMorgan or JPMC).
INTRODUCTION
Chain Bridge and JPMorgan agree on this much: Recorded phone calls and admissible
documents contain all of the facts relevant to Chain Bridge’s indemnification and unjust
enrichment claims. There is no dispute over what happened on March 26, 2020. Chain Bridge’s
third-party claims therefore are ripe for summary judgment.
But it is not JPMorgan that is entitled to summary judgment. Its motion turns on a series
of not-colorable legal theories that are expressly foreclosed by the plain text of UCC Section 4A-
211(f), its official commentary, and all the relevant case law.
JPMorgan’s lead argument is that it was Chain Bridge that cancelled JPMorgan’s payment
order, not JPMorgan, but that is both demonstrably false and a legal impossibility under the UCC.
As a softer version of the same argument, JPMorgan asserts that Chain Bridge, at a minimum,
“directed” or “laid the foundation” for the cancellation, and thereby forfeited its right to
indemnification. But upon Chain Bridge’s agreement to honor JPMorgan’s “request for reversal”
sent over Fedwire, JPMorgan’s liability for indemnity was “absolute,” regardless whether Chain
Bridge, as the receiving bank, played any role in JPMorgan’s decision to send that request.
Next, JPMorgan argues, with a straight face, that its liability is precluded by Section 211(f)
because, although Chain Bridge agreed to JPMorgan’s request for reversal, the parties “never
discussed the issue of indemnification.” But Section 4A-211(f) compels the opposite result,
because indemnification is automatic unless “otherwise provided” in an agreement between the
parties. Not surprisingly, JPMorgan provides no support whatsoever for it counter-textual reading
of the UCC. Finally, JPMorgan asserts that Chain Bridge’s fees and expenses, and any liability it
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may incur to Blue Flame, somehow did not result from Chain Bridge agreeing to JPMorgan’s
cancellation of its payment order. That ahistorical theory is contradicted by all relevant evidence.
JPMorgan fares no better when it seeks summary judgment on Chain Bridge’s alternative,
unjust enrichment claim. In the unlikely event that Chain Bridge is liable to Blue Flame, but not
indemnified by JPMorgan under the UCC, then JPMorgan will have been unjustly enriched by the
benefit that Chain Bridge conferred on it when Chain Bridge returned the wire.
COUNTERSTATEMENT OF UNDISPUTED FACTS
There is no dispute as to the facts that are material to Chain Bridge’s claims against
JPMorgan. They arise entirely from Fedwire messages transmitted by the parties, as well as
recorded phone calls between them. See Chain Bridge Memo. For S.J. Against JPMorgan at 5-10
(Statement of Undisputed Facts). Chain Bridge is nevertheless constrained, by Local Rule 56(B),
to respond to JPMorgan’s mischaracterization and selective recitation of those undisputed facts.1
A.
Events Prior To JPMorgan’s Cancellation Of Its Payment Order
4.
Chain Bridge does not dispute that some Chain Bridge employees, immediately
after learning of the expected wire transfer, expressed concern about its potential effect on Chain
Bridge’s capital requirements, although the cited materials do not support the assertion that its
President, David Evinger, ever did so. They also discussed the possibility of moving some portion
of the wired funds from the bank’s balance sheet, where most of it would not be insured, into an
1 Chain Bridge responds only to paragraphs of JPMorgan’s Statement of Undisputed Facts
(“SUF”) with which it disagrees or to state additional material facts. JPMorgan’s SUF contains
section headings that are not themselves supported by record citations. Chain Bridge does not
understand those headings to be stating assertedly undisputed facts, but for the avoidance of doubt
Chain Bridge disputes the assertions contained in headings 2c, 2d, and 2f for the reasons stated in
response to the numbered paragraphs that follow each of those headings. “JPMC Ex.” refers to
the exhibits to the Declaration of Meredith K. Loretta (ECF No. 113), and “CBB Ex.” refers to the
exhibits to the two Declarations of Donald Burke—(i) ECF Nos. 130 & 131 (CBB Exs. 1-99) and
(ii) the one being filed today in support of this memorandum (CBB Exs. 100-112).
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Insured Cash Sweep (ICS) account that would maximize the customer’s benefit from FDIC
insurance. See JPMC Ex. 2 at 662-63, CBB Ex. 78 (Williamson Tr.) at 80-82, CBB Ex. 100
(Brough Tr.) at 253-55. As additional material facts, Chain Bridge states that (i) on March 15,
2020, in response to the COVID-19 pandemic, the Federal Reserve Board reduced reserve ratio
requirements to zero percent, effective on March 26, 2020, CBB Ex. 100 (Brough Tr.) at 55; see
also Press Release, Board of Governors of the Federal Reserve, Federal Reserve Actions to
Support the Flow of Credit to Households and Businesses (Mar. 15, 2020), https://perma.cc/PU6C-
2GYY; (ii) Blue Flame told Chain Bridge that it intended to spend most of the wired funds fairly
rapidly, meaning that most of those funds were not expected to remain on Chain Bridge’s balance
sheet for very long, see JPMC Ex. 2 at 669; and (iii) Chain Bridge’s CEO John Brough and CFO
Joanna Williamson explained, without contradiction, that Chain Bridge could have retained all of
the wired funds on its balance sheet, if necessary, without adversely affecting its risk-based capital
ratios, CBB Ex. 40 (Brough Tr.) at 90-91; CBB Ex. 78 (Williamson Tr.) at 84-85.2
5.
Chain Bridge disagrees with JPMorgan’s mischaracterization that Chain Bridge
was concerned that “accepting the wire” would “run afoul of its Bank Secrecy Act obligations.”
Chain Bridge automatically accepted the wire, by operation of the Fedwire system, when it
received JPMorgan’s payment order at 11:55 AM on March 26, 2020. Chain Bridge does not
dispute, however, that it evaluated the wire transfer consistent with its substantial and important
obligations under the Bank Secrecy Act. See JPMC Ex. 7 (Brough Tr.) at 72 (Bank Secrecy Act
applies to “every single transaction that runs through the bank”), 200 (“[I]f there is a transaction
2 The only conceivable effect, bank officials testified, would have been on Chain Bridge’s
leverage ratio. But that ratio is measured and reported as a quarterly average, and so a large deposit
received on March 26—just five days before the quarter’s end—would have had a negligible effect
on the leverage ratio (which also had plenty of cushion). CBB Ex. 101 (Williamson Tr.) at 90-91.
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that is unusual or out of pattern, then it must be investigated.”), 207 (“We considered the impact
of the transaction in regards to the Bank Secrecy Act and our requirements under the Bank Secrecy
Act along with all the other unanswered questions that we had.”).
7.
Chain Bridge does not dispute that, prior to receiving JPMorgan’s payment order,
it considered whether Blue Flame’s anticipated transaction might be a scam (including, potentially,
a scam being perpetrated against Blue Flame and its principals). Chain Bridge denies that, “[s]oon
after learning about the expected transaction,” and prior to JPMorgan’s payment order, it reached
any conclusion about Blue Flame’s right to funds that the bank had not even received yet.
8.
Chain Bridge does not dispute that its internal wire transfer policy states that “[i]f
there is any question as to the beneficiary’s right to the funds, such as a discrepancy between name
and account number, the wire will be returned.” As an additional material fact, Chain Bridge states
that its internal wire transfer policy also states, in the immediately preceding sentence, that “[i]f
the Bank notices a discrepancy between the beneficiary account number and the beneficiary name,
the Bank reserves the right to return the wire although it is not obligated to do so.” JPMC Ex. 10
at 4298 (emphasis added).
9.
Chain Bridge disputes, in part, JPMorgan’s contention that Chain Bridge “had no
expectation that it would make an exception to its own internal policies for a $456 million wire.”
JPMorgan relies on testimony, not in dispute, that Chain Bridge did not expect to make an
exception to its funds availability policy for the $456 million wire transfer, such that those funds
would not have been made available to Blue Flame any earlier than March 27, 2020. See JPMC
Ex. 7 (Brough Tr.) at 199. Chain Bridge’s funds availability policy, unlike its internal guidance
on processes and procedures, is required by federal regulation and must be disclosed to customers,
who must be notified of any changes to that policy. See 12 C.F.R. §§ 229.16(a), 229.17, 229.18(e).
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There is no testimony or other record evidence supporting JPMorgan’s suggested proposition that
Chain Bridge expected that it would not make an exception to any internal policy in connection
with the $456 million wire transfer.
14.
Chain Bridge does not dispute that JPMorgan sent Chain Bridge a payment order,
as part of the wire transfer, by Fedwire at 11:55 AM ET after—unbeknownst to Chain Bridge—
JPMorgan had received confirmation from its customer. As additional material facts, JPMorgan
sent its payment order to Chain Bridge after the wire triggered JPMorgan’s automated fraud alert
system and before JPMorgan had completed its investigation into the highly suspicious wire
transfer. JPMorgan also sent its payment order to Chain Bridge before Rakesh Korpal had received
wire-transfer details that he had requested the previous night and again that morning. See CBB
Ex. 47 (Korpal Tr.) at 56-62; CBB Ex. 58 (Coffey Tr.) at 45, 60.
20.
Chain Bridge disputes that it is “rare” for a counterparty bank to contact a non-
customer to verify a transaction, particularly in light of the rise of cyber fraud and computer
hacking. Heather Schoeppe, Chain Bridge’s Senior Vice President and Branch Manager, testified
that calling non-customers is “pretty standard practice,” and recalled numerous situations in which
she had called non-customers to verify transactions. CBB Ex. 102 (Schoeppe Tr.) at 258-60.
Chain Bridge’s Bank Secrecy Act compliance expert likewise testified that, in his current capacity
as the Chief Compliance Officer for a bank in New York, he “routinely” contacts his customers’
wire-transfer counterparties to understand those transactions, including directing other bank
employees to contact just one specific non-customer originator about once a month to conduct due
diligence. CBB Ex. 103 (Grice Tr.) at 291-95. Based on his experience, that expert testified that
“the decisions by Chain Bridge personnel to ask questions of the State of California regarding the
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California Wire Transfer” “were reasonable and consistent with industry standards and practices.”
Id. at 294; see also CBB Ex. 53 (Grice Rep.) at 55.
23.
Chain Bridge does not dispute that, at approximately 12:30 PM ET, Tim Coffey of
JPMorgan called Chain Bridge and spoke with Evinger. As additional material facts, Chain Bridge
states that (i) Coffey called Chain Bridge unprompted by Chain Bridge, and at Rakesh Korpal’s
direction that he “engage” Chain Bridge to hold the funds that JPMorgan had just sent to Chain
Bridge, CBB Ex. 58 (Coffey Tr.) at 60-61; and (ii) before Coffey spoke with Evinger, he first
spoke with another Chain Bridge representative to whom Coffey reported that JPMorgan had
“concerns of fraud” involving the wire transfer, CBB Ex. 57, CBB Ex. 58 (Coffey Tr.) at 63-64.
28.
Chain Bridge does not dispute that, when Korpal called Evinger and Brough at
12:44 PM, he reiterated to Chain Bridge that JPMorgan had concerns with the wire transfer that it
had already sent to Chain Bridge. As additional material facts, and more specifically, Korpal stated
that JPMorgan’s “global security investigations team is coming back to me and saying that this
does not look right” and that his own research into the transaction was “all leading to not-good
places.” CBB Ex. 59 at 2:42-2:51, 3:00-3:16. Korpal stated that, as part of his ongoing
investigation, he would contact the JPMorgan banker who works with the State of California. Id.
at 2:10-2:30, 4:11-4:15.
30.
Chain Bridge does not dispute that, by voicemail and telephone call, Fee Chang of
the California Department of General Services stated that she believed the wire transfer to be
legitimate, and confirmed its amount. As an additional material fact, Chang also stated that Natalie
Gonzales at the State Treasurer’s Office was “the one in charge of the transfers” and offered to
have that office contact Chain Bridge. See JPMC Ex. 28 at 0:20-0:42.
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32, 33, 34 & 35. Chain Bridge does not dispute JPMorgan’s account of Chain Bridge’s
short call with the California State Treasurer’s Office. As additional material facts, Chain Bridge
states that Gonzales and Mark Hariri told Chain Bridge that they were unsure about the wire
transfer, and asked Chain Bridge not to make the funds available to Blue Flame until they spoke
with officials at the California Department of General Services and gathered additional
information about the transaction. JPMC Ex. 29 at 4466; CBB Ex. 62 (Gonzales Tr.) at 50.
B.
JPMorgan’s Cancellation Of Its Payment Order
37 & 38. Chain Bridge disagrees with JPMorgan’s misleading and selective description of
the 1:34 PM call between Korpal and Evinger and Brough. Korpal told Chain Bridge that
California is “a bit unsure” about the transaction. JPMC Ex. 30 at 0:00-0:02. Evinger responded
by asking Korpal (in a question that JPMorgan’s brief never quotes in full): “Is there any way for
JPMorgan to issue a recall for the wire, so that while you intervene in this you have the funds and
feel more comfortable?” Id. at 0:04-0:14. Korpal replied, “[w]ell, I feel comfortable that you’re
holding the money right now. I can issue a recall. But I don’t think you and I want to get onto the
front page of the Wall Street Journal, especially if this is a legitimate transaction.” Id. at 0:14-
0:28. After Brough said, “OK,” Korpal continued “give me a few more minutes.” Id. at 0:30-
0:32. The call concluded with Evinger telling Korpal that “[w]e look forward to hearing back from
you.” Id. at 0:32-0:35.
40.
Chain Bridge disagrees with JPMorgan’s mischaracterization of Evinger’s question
to Korpal as having been a “request for a reversal” that JPMorgan then “accommodate[d].” See
¶¶ 37 & 38 supra; see also pp. 13-15 infra (addressing the legal impossibility of a receiving bank’s
cancellation of a sender’s payment order). Chain Bridge also disagrees that Korpal’s instruction
to Coffey to recall the wired funds was made only “[i]n response to” Evinger’s question. Korpal
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testified that his instruction to Coffey was to “call Chain Bridge Bank and confirm that we’re going
to recall the funds.” JPMC Ex. 13 (Korpal Tr.) at 254 (emphasis added). Coffey testified that he
understood that instruction as “a directive from [Korpal] to me to engage Chain Bridge Bank to
recall the funds.” CBB Ex. 58 (Coffey Tr.) at 124-25. And Coffey did so by calling Chain Bridge
and telling it that JPMorgan was “going to be recalling those funds”—not because of, or in
response to, Evinger’s question, but rather because “we have enough concerns that we feel we need
to claw those funds back.” JPMC Ex. 31 at 0:07-0:14 (emphasis added). JPMorgan coded its
subsequent Fedwire service message to Chain Bridge as a request for reversal from JPMorgan.
JPMC Ex. 32. It asked Chain Bridge, “PER REM REQ PLS RETURN FUNDS QUOTING OUR
REF”—meaning “per remitter’s request please return funds quoting our reference.” Id.; JPMC
Ex. 33 at 14. And when Chain Bridge honored that cancellation, its Fedwire message was coded
as a responsive “reversal of transfer” being sent “PER YOUR REQUEST”—meaning per
JPMorgan’s request. JPMC Ex. 34; see also JPMC Ex. 33 at 14. There is no record support for
JPMorgan’s contention that it cancelled its payment order only in response to Evinger’s inquiry—
and that unsupported contention is certainly not “undisputed.”
42 & 43. Chain Bridge disagrees with JPMorgan’s misleading and selective description of
the 1:37 PM call from Coffey to Evinger and Brough. Chain Bridge could not, and did not, make
a “request for reversal” that JPMorgan then “agreed to.” See ¶¶ 37-38, 40 supra. At the beginning
of the 1:37 PM call, Coffey stated: “We’re going to be recalling those funds, OK? We have enough
concerns that we feel we need to claw those funds back.” JPMC Ex. 31 at 0:07-0:14. Coffey then
asked Chain Bridge whether Chain Bridge needed “a recall message from us.” Id. at 0:14-0:16.
Evinger responded that “[w]e’d like official communication from JPMorgan to us to recall the
funds,” and Brough added that it should be sent “over the Fedline platform.” Id. at 0:17-0:25.
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Coffey said “that’s not a problem. We’ll send that over. We can get that out to you in the next
couple of minutes.” Id. at 0:28-0:32. Coffey then thanked Chain Bridge for its “cooperation in
this,” reiterated that JPMorgan would “get that service message out now,” and emphasized to
Chain Bridge that “as quickly as you can return [the wire], that’d be great.” Id. at 0:36-0:49. As
an additional material fact, Chain Bridge states that Coffey asked Chain Bridge to return the funds
quickly because there was “need to get word out to senior management” at JPMorgan “that the
situation has been taken control of” and to “put the situation to rest.” CBB Ex. 58 (Coffey Tr.)
at 130.
44.
Chain Bridge does not dispute the substance of JPMorgan’s 2:05 PM Fedwire
service message, which is JPMC Ex. 32, but disagrees with JPMorgan’s characterization of that
service message as having been sent “in response to Chain Bridge’s reversal request.” See ¶¶ 37-
38, 40, 42-43. As additional material facts, Chain Bridge states that Coffey had instructed his
colleague to draft a “straight recall” message, not one that specified “NO INDEMNITY,” and then
reviewed and approved that “straight recall” message. JPMC Ex. 42. After issuing that straight
recall, JPMorgan twice called Chain Bridge to ask about the status of that recall request, CBB Ex.
47 (Korpal Tr.) at 87-88, and California’s State Treasurer’s Office also called Chain Bridge to
follow up on the wire recall, Stipulation, Dkt. No. 96, at ¶¶ 28, 30.
45.
Disputed. See ¶¶ 37-38, 40, 42-44. In any event, for the reasons explained below
(pp. 15-19), it is immaterial whether, in fact, JPMorgan cancelled its payment order only in
response to Evinger’s question.
46.
Chain Bridge does not dispute that, when JPMorgan cancelled its payment order,
Chain Bridge was holding the wired funds and had not made them available to Blue Flame—just
as JPMorgan and California requested that it continue to do. See CBB Ex. 58 (Coffey Tr.) at 45,
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63-66. To the extent that JPMorgan means to say that Chain Bridge would have continued that
hold indefinitely, in the absence of any cancellation by JPMorgan of its payment order, that is
disputed. In the testimony that JPMorgan relies on, Brough states that “the funds were going to
be held” only while Chain Bridge “conducted our investigation,” and that Chain Bridge would
have consulted legal counsel to determine whether to make funds available to Blue Flame the next
day. CBB Ex. 40 (Brough Tr.) at 196-97, 225-26.
47.
Undisputed. As an additional material fact, Chain Bridge states that Chain Bridge’s
3:21 PM Fedwire message contained the text “RTNG YR IMAD” “PER YOUR REQUEST,”
indicating that Chain Bridge was returning the wire transfer that JPMorgan had sent at 11:55 AM
ET, and doing so at JPMorgan’s request. See CBB Ex. 68; CBB Ex. 91 (Grice Indem. Rep.)
at 6-7.
48.
Chain Bridge disagrees with JPMorgan’s mischaracterization of there having been
any “agreement” concerning JPMorgan’s cancellation of its payment order other than JPMorgan’s
2:05 PM Fedwire service message requesting the reversal of that payment order and Chain
Bridge’s agreement to that cancellation by returning the funds via its responsive 3:21 PM Fedwire
payment order. Chain Bridge does not dispute that when Coffey told Brough and Evinger, on their
1:37 PM call, that JPMorgan would be recalling the funds, Brough and Evinger asked that it do so
by “official communication from JPMorgan to us to recall the funds” over the Fedwire platform.
JPMC Ex. 31 at 0:17-0:25.
50 & 51. Disputed. Neither Chain Bridge’s President nor its CEO disclaimed the need for
indemnification upon inquiry from one of the bank’s employees. When Evinger first told Chain
Bridge employee Claudia Mojica-Guadron, a technician who works in wire-transfer operations,
that JPMorgan would be recalling the California wire, Mojica-Guadron asked Brough and Evinger
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whether Chain Bridge would be “getting an indemnity letter from Chase.” Evinger explained that
“you’re going to get a service bureau message through Fedline . . . a recall.” JPMC Ex. 23 at 1:20-
1:30. Chain Bridge “didn’t view there was a need for an indemnification [letter] based on the
recall because the recall had that indemnification built in, and we viewed JPMorgan, you know, as
our counterparty.” CBB Ex. 28 (Evinger Tr.) at 261. Federal Reserve Bank Operating Circular
No. 6—the Federal Reserve’s official guidance for wire transfers sent over Fedwire—states that
“[b]y requesting cancellation or amendment of a Payment Order, the sender may be liable under
Section 4A-211 of article 4A unless the request states ‘NO INDEMNITY.’” CBB Ex. 86 at ¶ 14.1.
There is no dispute that JPMorgan’s 2:05 PM cancellation message, sent over Fedwire’s Fedline
platform, did not say “No Indemnity” or include any other disclaimer of JPMorgan’s
indemnification obligation. CBB Ex. 65.
62.
As explained below, at p. 24, Chain Bridge disputes, as a matter of law, that
JPMorgan “retained nothing” after crediting the funds to California’s account at JPMorgan.
C.
Additional Material Facts (JPMorgan’s Claim Against California)
63.
On March 20, 2021, while this case was pending, JPMorgan submitted a formal
claim against its customer, the State of California. CBB Ex. 96. In that formal claim, JPMorgan:
(a)
asserts that California “decided to reverse the payment—because of
concerns about the vendor—and JPMC assisted the State in recovering the entire amount
of its funds,” which JPMorgan was “honored” to do (id. at 1);
(b)
admits that California, after originating the Wire Transfer, “subsequently
decided that the Wire Transfer should be reversed” and was “eager to obtain a return of the
funds in full and inquired with JPMC about the status of the reversal before and until the
funds had been returned” (id. at 3-4);
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(c)
identifies California as the entity “requesting that the Wire Transfer be
reversed” and “having decided that the funds should be returned to the State” (id. at 4);
(d)
emphasizes that the State Treasurer’s Office “has taken responsibility for
having procured the reversal of the Wire Transfer” through JPMorgan (id.);
(e)
states that “JPMC’s actions concerning the Wire Transfer, including, in
particular, the reversal . . . were taken on behalf of, at the direction of, and/or for the benefit
of the [California] Agencies and Employees” (id. at 5 (emphasis added); see also id. at 3
(similar));
(f)
claims that “to the extent JPMC suffers any loss (including attorneys’ fees)
and/or incurs any liability to Chain Bridge for any loss (including any attorneys’ fees) in
the Blue Flame litigation . . . the [California] Agencies and Employees are fully
responsible” (id. at 5);
(g)
describes the basis of California’s liability to JPMorgan as that California
is “required to indemnify JPMC for any and all loss JPMC incurs in the Blue Flame
litigation,” including because (i) “[g]overning statutory provisions, including U.C.C. § 4A-
211(f) as incorporated into Subpart B of the Federal Reserve Board’s Regulation J, require
indemnification here” and (ii) “[e]quity further requires [California] to make JPMC whole”
based on other causes of action “including but not limited to unjust enrichment” (id. at 7).
ARGUMENT
I.
JPMorgan Is Not Entitled To Summary Judgment On Chain Bridge’s
Indemnification Claims (Counts I and II)
As explained in Chain Bridge’s motion for summary judgment, the undisputed material
facts compel the conclusion that JPMorgan is liable under Section 4A-211(f) to indemnify Chain
Bridge for any liability Chain Bridge may have to Blue Flame, and for Chain Bridge’s attorney’s
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fees and other expenses. The three arguments JPMorgan asserts in support of its competing motion
for summary judgment each read the UCC to mean the opposite of what it actually says.
A.
Section 4A-211(f)’s Indemnification Provision Applies Here
Section 4A-211(f) provides that when a receiving bank accepts a sender’s payment order,
and later agrees to the sender’s cancellation of that payment order, the receiving bank is
indemnified by the sender for any resulting losses and expenses, unless an agreement between the
parties states otherwise. JPMorgan is wrong that Section 4A-211(f) is “inapplicable” here. Br.
14-21. That section’s unambiguous terms afford Chain Bridge an indemnification right against
JPMorgan, and Chain Bridge did not lose that right, as JPMorgan incorrectly contends, by either
cancelling JPMorgan’s payment order itself or “directing” JPMorgan to cancel it.
1.
Section 4A-211(f)’s application to the undisputed facts follows from the plain text
of Article 4A’s cancellation provision. There is no dispute that JPMorgan sent Chain Bridge a
payment order directing Chain Bridge to pay $456 million to Blue Flame Medical LLC. JPMC
SUF ¶ 14. Nor is there any dispute that Chain Bridge, by operation of the Fedwire system,
automatically accepted that payment order upon its receipt. See Counterstatement of Undisputed
Facts (“CSUF”) ¶ 5; UCC §§ 4A-209(b)(2), 4A-403(a)(1), 4A-403 cmt. 1. And there is no dispute
that there was a “cancellation” of JPMorgan’s payment order within the meaning of Section 4A-
211(a). JPMorgan’s brief refers to “the cancellation” of its payment order no less than 20 times.
See Br. 3, 14, 16, 17 n.3, 18, 19, 20, 21 n.4, 28.
JPMorgan nevertheless contends that Section 4A-211(f) does not apply because Chain
Bridge, not JPMorgan, cancelled JPMorgan’s payment order. Br. 16-17. It argues that Chain
Bridge President David Evinger’s question to JPMorgan’s Rakesh Korpal—“Is there any way for
JPMorgan to issue a recall for the wire so that while you intervene in this you have the funds and
feel more comfortable?” (CSUF ¶¶ 37-38)—amounted to Chain Bridge’s “oral request to return
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14
the funds” that “constitutes a cancellation request under Article 4A.” Br. 16; see also id. at 17
(referring to “Evinger’s oral cancellation”).
That argument is foreclosed by Section 4A-211(a), which states that every cancellation of
a payment order results from “[a] communication of the sender of a payment order . . . transmitted
to the receiving bank.” UCC § 4A-211(a) (emphasis added); see also UCC § 4A-211(b)
(describing when “a communication by the sender cancelling or amending a payment order” is
effective prior to a payment order’s acceptance) (emphasis added). The UCC does not allow a
receiving bank to cancel a sender’s payment order; only JPMorgan could cancel JPMorgan’s
payment order. Chain Bridge was powerless to do what JPMorgan says it did.3
JPMorgan tries to obscure that critical point by replacing with ellipses the phrases within
Section 4A-211(a) that identify the respective roles of senders and receiving banks in a payment-
order cancellation. See Br. 16 (presenting Section 4A-211(a) as stating that “[a] communication
. . . cancelling . . . the order may be transmitted . . . orally, electronically, or in writing” (all
omissions JPMorgan’s)). But JPMorgan cannot make Section 4A-211(a) mean something other
than what it says simply by leaving out the unhelpful words.4
“Cancellation” of a sender’s payment order is something that only the sender of that
payment order can do. And that is what JPMorgan did here, via its 2:05 PM “Fedwire reversal
3 JPMorgan also cites Section 4A-210(a) as support for its argument that Evinger’s question to
Korpal cancelled JPMorgan’s payment order. Br. 16. But Section 4A-210(a) governs a receiving
bank’s “rejection” (not cancellation) of a payment order, which can take place only before a
receiving bank accepts a payment order. See UCC § 4A-210(d). Section 4A-210 thus has no
bearing on JPMorgan’s liability to indemnify Chain Bridge.
4 JPMorgan’s motion fails for the additional reason that, even if a receiving bank could cancel
a sender’s payment order (and it cannot), a reasonable jury could not find that Evinger’s question
to Korpal accomplished that feat. There is no dispute that all Evinger asked Korpal was whether
there was “any way for JPMorgan to issue a recall for the wire so that while you intervene in this
you have the funds and feel more comfortable.” CSUF ¶¶ 37-38.
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message.” Br. 17. That message was not some “subsequent reaction” to “Chain Bridge’s original
cancellation request.” Id. It was the “communication of the sender of a payment order”—i.e.,
JPMorgan—“cancelling or amending the order”—i.e., JPMorgan’s 11:55 AM payment order—
“transmitted to the receiving bank”—i.e., Chain Bridge. UCC § 4A-211(a) (emphasis added).
JPMorgan’s own expert agreed that JPMorgan’s 2:05 PM service message was a communication
cancelling JPMorgan’s payment order under Section 4A-211(a). See CBB Ex. 92 (Baxter Tr.) at
50.
2.
There is also no merit to JPMorgan’s argument that, even if JPMorgan did cancel
its own payment order, Chain Bridge is not entitled to indemnification because it either “directed”
or “laid the foundation for” JPMorgan’s cancellation. See Br. 18-21.
As an initial matter, JPMorgan mischaracterizes the undisputed factual record when it says
that Chain Bridge “directed the cancellation at every material turn.” Br. 18. There is no dispute
that JPMorgan called Chain Bridge first to report its “concerns of fraud” and to ask Chain Bridge
to hold the funds and not pay Blue Flame. CSUF ¶ 23. There is also no dispute that JPMorgan
warned Chain Bridge that its own investigation was “all leading to not-good places” and that
JPMorgan thought the transaction “does not look right.” CSUF ¶ 28. Then, when JPMorgan’s Tim
Coffey called Chain Bridge to set the cancellation in motion, he told Chain Bridge that JPMorgan
would be “recalling those funds” because “we have enough concerns that we feel we need to claw
those funds back.” CSUF ¶¶ 42-43 (emphasis added). Coffey was under pressure, from
JPMorgan’s “senior management,” to “take[] control of” the bank’s misbegotten payment order
and “put the situation to rest.” Id. To that end, after cancelling the wire, JPMorgan called Chain
Bridge twice to follow up on Chain Bridge’s return of the funds. CSUF ¶ 44. And as if that were
not enough, JPMorgan concedes, as part of its formal claim against California, that California (not
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Chain Bridge) “decided to reverse the payment,” and that JPMorgan “assisted” California in doing
so. CSUF ¶ 63(a); see also id. ¶ 63(e) (JPMorgan’s further admission that its actions, “including,
in particular, the reversal” of the wire transfer, “were taken on behalf of, at the direction of, and/or
for the benefit of” California (emphasis added)). That evidence conclusively establishes that
JPMorgan cancelled its payment order for its own reasons—just as Coffey told Brough and
Evinger—not that JPMorgan’s cancellation of its payment order was orchestrated by Chain Bridge.
More to the point, none of this makes any difference for purposes of Section 4A-211(f).
That provision states a straightforward rule that, absent a contrary agreement between the parties,
a sender is always liable to a receiving bank that, after accepting the sender’s payment order, agrees
to the sender’s cancellation of that payment order and incurs losses and expenses as a result.
Whether the sender cancels its payment order of its own accord, or because the receiving bank
asks it to, is of no consequence.
JPMorgan nevertheless would graft onto the UCC’s clear rule a bevy of fact-specific
exceptions that reviewing courts would have to consider on a case-by-case basis. According to
JPMorgan’s amended version of Section 211(f), indemnification happens unless the receiving
bank raised the topic of cancellation first, or unless the receiving bank was happy to agree to
cancellation, or unless the receiving bank asked the sender to put its cancellation in writing. Of
course, Section 211(f)’s text does not contain any such caveats, or otherwise exclude from its ambit
receiving banks that “sought,” “directed,” “requested,” “obtained,” or “laid the foundation” for a
sender’s cancellation of its payment order.
JPMorgan tries to locate those caveats in Section 4A-211’s Official Comments, or
common-law indemnification principles, but neither source supports its departure from the UCC’s
clear text. Indeed, Section 4A-211’s Official Comments reinforce that “[if] a receiving bank
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agrees to cancellation . . . it is automatically entitled to indemnification from the sender under
subsection (f).” UCC § 4A-211 cmt. 5 (emphasis added). JPMorgan’s brief omits that part of the
Comment. It fixates only on the next two sentences, which observe that this automatic
“indemnification provision recognizes that a sender has no right to cancel a payment order after it
is accepted by the receiving bank. If the receiving bank agrees to cancellation, it is doing so as an
accommodation to the sender and it should not incur a risk of loss in doing so.” Id. But that
passage merely acknowledges that a receiving bank that has accepted a payment order is never
required to agree to its cancellation, such that any agreement to cancellation is always done as an
accommodation to the sender (and at some risk to the receiving bank). That commentary is not an
invitation to add to Section 4A-211(f) a requirement that receiving banks, to be indemnified, must
prove that they initially were “reluctant” or “agnostic” (Br. 15), yet ultimately agreed to the
cancellation just to be nice. A receiving bank need not prove that its agreement to cancellation
accommodated only the sender’s wishes. Banca Commerciale Italiana, N.Y. Branch v. Northern
Tr. Int’l Banking Corp., 160 F.3d 90, 94 (2d Cir. 1998) (a sender incurs “absolute liability” under
Section 4A-211(f) “even though the receiving bank has freely agreed to the cancellation”).
JPMorgan also resorts to common-law limitations on indemnification rights and
obligations, arguing (at Br. 15) that those principles should “inform and supplement” the text of
Section 4A-211(f). But Section 4A-211(f) marks an intentional “depart[ure] from the common
law” that was designed to release receiving banks from any requirement to prove “the elements
required to establish common law fraud or unjust enrichment” before they can recover their losses
and expenses from a sender. Banca Commerciale Italiana, 160 F.3d at 94. As JPMorgan
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acknowledges (Br. 15), common-law principles do not “supplement” UCC provisions that
intentionally “displaced” them with a default rule. UCC § 1-103(b).5
What is more, supplanting the UCC’s clear indemnification rule with a case-specific
comparison of the motives and interests of senders and receiving banks would generate the very
uncertainty about those parties’ rights and obligations that Section 4A-211(f) is designed to
eliminate. See Banca Commerciale Italiana,, 160 F.3d at 95 (“Indeed, it is widely recognized that
Article 4A was enacted to correct the perceived inadequacy of attempting to define rights and
obligations in funds transfers by general principles of common law.” (alterations and quotation
marks omitted)). Section 4A-211(f) provides that parties can expressly agree that there will be no
indemnification between them; it does not contemplate after-the-fact avoidance of indemnification
based on commentary and common law.
3.
For the same reasons, Chain Bridge’s supposedly “powerful incentives” (Br. 19)
for wanting JPMorgan to cancel its payment order are beside the point. Chain Bridge agrees that
it was investigating the wire transfer consistent with its obligations under the Bank Secrecy Act to
detect and prevent fraudulent and suspicious financial activity. CSUF ¶ 5. So too was JPMorgan.
Tim Coffey testified that JPMorgan’s senior management was especially eager to “put the situation
to rest” after realizing that JPMorgan had directed payment of $456 million of its customer’s funds
5 In any case, common-law principles of indemnification and restitution would not bar Chain
Bridge’s recovery from JPMorgan even if they were relevant. In White v. Johns-Manville Corp.,
662 F.2d 243 (4th Cir. 1981), the admiralty case JPMorgan cites for the metes and bounds of
common-law indemnification, the Fourth Circuit held that “indemnity may be awarded . . . where
the indemnitee acted pursuant to directions of the indemnitor which he reasonably believed to be
lawful.” Id. at 249. Here, Chain Bridge agreed to JPMorgan’s cancellation of its payment order,
believing cancellation to be lawful, based in substantial part on JPMorgan’s representations to
Chain Bridge that JPMorgan’s Global Security and Investigations Team was working with
California’s banker, and that its investigation was “all leading to not-good places” and had
determined that the wire transfer did “not look right.” CSUF ¶ 28.
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to a three-day-old company before having completed its own investigation into the highly
suspicious nature of that transaction. See CSUF ¶¶ 42-43. And JPMorgan’s expert explained that
JPMorgan, as the largest bank in the country, faces especially rigorous regulatory scrutiny,
including from a dedicated team of permanently on-site bank examiners. CBB Ex. 104 (Pesce
Rep.) at 6-7, 9. It “would have been out-of-line with regulatory expectations” of JPMorgan for it
to have “knowingly let[] such a large sum go to an entity with limited, if any internet presence,
with no medical supply history, that had established accounts only the day before, that was
controlled by a political lobbyist . . . , and whose own bank was uncomfortable with the
transaction.” Id. at 11.
It likewise does not matter whether Chain Bridge had its own business reasons for agreeing
to JPMorgan’s cancellation request. In any event, JPMorgan misstates the record on that score.
Chain Bridge officials have explained—without contradiction—that a $456 million deposit into
Blue Flame’s account would not have adversely affected the bank’s risk-based capital ratios,
leverage ratio, or any “reserve” requirements, the latter of which had been reduced to zero as of
the date of the wire transfer. See CSUF ¶ 4 & n.2. And contrary to JPMorgan’s unsupported
assertion that Chain Bridge “had no easy alternative to deal with such an extraordinary wire”
(Br. 19), the record shows that: (i) Blue Flame told Chain Bridge that it was going to spend (i.e.,
withdraw) most of the incoming funds quickly, CSUF ¶ 4; (ii) Chain Bridge was preparing to use
at least one of many available financial products to allow it to place at least $150 million of any
remaining funds into FDIC-insured accounts located at other banks, id.; and (iii) as Blue Flame’s
own expert conceded, if for any reason Chain Bridge did not wish to hold the deposit on its balance
sheet, it could have handed Blue Flame a cashier’s check for the balance and closed the account,
CBB Ex. 105 (O’Malley Tr.) at 67-69. There is no merit to the suggestion that Chain Bridge was
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“driven” to agree to JPMorgan’s cancellation request because of concerns about its own balance
sheet.
B.
There Was No Agreement Between JPMorgan And Chain Bridge That
“Otherwise Provided” That JPMorgan Would Not Indemnify Chain Bridge
There is no support—literally none—for JPMorgan’s assertion that “Chain Bridge and
JPMC agreed that there would be no indemnity.” Br. 14. That never happened. Indeed, JPMorgan
concedes that “indemnification was not a term of the parties’ greement,” Br. 23, and that the two
parties “never discussed indemnity,” Br. 10 at ¶ 49. That is the end of the matter, so far as Section
4A-211(f) is concerned. It holds that its indemnification obligation applies “[u]nless otherwise
provided in an agreement of the parties or a funds-transfer system rule.”6
JPMorgan nevertheless disclaims its liability for Chain Bridge’s losses and expenses on
the theory that the two banks had an agreement—“to keep each other apprised of their respective
bank’s investigations,” and “about how to handle the wire” (Br. 22)—that “did not include any
obligation by JPMC to indemnify Chain Bridge” (Br. 21). In other words, JPMorgan professes to
read Section 4A-211(f) to require the parties to any agreement concerning the cancellation of a
payment order to expressly state that the sender will indemnify the receiving bank. See Br. 21.
According to JPMorgan, if the receiving bank “agrees to cancellation” (Section 4A-211(f)), but
that agreement is silent as to indemnification (as the parties were here) then the sender has no
obligation to the receiving bank.
The UCC states the opposite rule. The sender’s obligation to indemnify the receiving bank
is automatic “[u]nless otherwise provided” in the parties’ agreement. UCC § 4A-211(f). The
parties’ agreement does not need to include the indemnification obligation that is already stated in
6 It is undisputed that no funds-transfer system rule displaced Section 4A-211(f)’s
indemnification provision on the facts of this case.
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the UCC. The law could not possibly be understood otherwise. Once a receiving bank has
accepted a sender’s payment order, its agreement is required for cancellation of that payment order
to be effective. UCC § 4A-211(c). There is thus always an “agreement of the parties” to such a
cancellation. If JPMorgan were right that every such agreement must affirmatively state the
cancelling sender’s obligation to indemnify the agreeing receiving bank, then Section 4A-211(f)
would cease to have any force in every case to which it applies.
Nor is there any basis in the record for JPMorgan’s assertion that Chain Bridge “disclaimed
the need for JPMC to indemnify Chain Bridge.” Br. 23. JPMorgan cites to Brough’s and Evinger’s
response to a Chain Bridge wire-operations employee, that Chain Bridge did not require an
“indemnity letter” from JPMorgan, because JPMorgan would be sending a service message over
the Fedwire system, documenting its cancellation of its payment order. JPMC Ex. 23. The
unrebutted evidence is that Chain Bridge “didn’t view there was a need for an indemnification
[letter] based on the recall because the recall had that indemnification built in, and we viewed
JPMorgan, you know, as our counterparty.” CBB Ex. 28 (Evinger Tr.) at 261; see also CSUF
¶¶ 50-51; CBB Ex. 86 (Fed. Res. Operating Circular 6 (2019)) at ¶ 14.1 (“By requesting
cancellation or amendment of a Payment Order, the sender may be liable under Section 4A-211 of
Article 4A unless the request states ‘NO INDEMNITY.’”).
C.
Chain Bridge’s Legal Expenses, And Any Judgment That Blue Flame Obtains,
Are A Result Of JPMorgan’s Cancellation Of Its Payment Order
Chain Bridge agreed to JPMorgan’s cancellation of its payment order and, accordingly,
returned $456 million to it instead of paying that sum to Blue Flame. Blue Flame claims that Chain
Bridge should not have agreed to cancellation and was required to pay the funds to it. It alleges
that Chain Bridge “had no basis to agree to cancel or amend the payment order or to otherwise
return the transferred funds.” Compl. ¶ 93. The fees and expenses Chain Bridge must bear to
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defend its agreement to JPMorgan’s cancellation, and any damages Chain Bridge may be ordered
to pay, therefore are amounts incurred “as a result of” JPMorgan’s cancellation within the meaning
of Section 4A-211(f). Indeed, that is exactly what JPMorgan is claiming against California based
on California’s cancellation of its payment order to JPMorgan. See CSUF ¶ 63(g) (JPMorgan’s
assertion that California is “required to indemnify JPMC for any and all loss JPMC incurs in the
Blue Flame litigation” because Section 4A-211(f) “require[s] indemnification here”).
JPMorgan again asks the Court to ignore what is before its eyes. It argues that Chain
Bridge’s damages are not the “result” of JPMorgan’s cancellation of the payment order because,
it speculates, Chain Bridge would have incurred the same losses and expenses either way. Br. 24-
26. It asserts, without any factual basis, that Chain Bridge would have permanently “deprive[d]
Blue Flame of access to the funds” no matter what JPMorgan did. Br. 25. But JPMorgan cannot
even defeat Chain Bridge’s motion for summary judgment based on such speculation. See Smith
v. Schlage Lock Co., 986 F.3d 482, 486 (4th Cir. 2021) (per curiam) (“Of course, unsupported
speculation is not sufficient to defeat a summary judgment motion.” (alteration omitted)); see also
Daniels v. Twin Oaks Nursing Home, 692 F.2d 1321, 1324 (11th Cir. 1983) (“[A]n inference is
not reasonable if it is only a guess or a possibility, for such an inference is not based on the
evidence, but is pure conjecture and speculation.” (quotation marks omitted)). JPMorgan certainly
cannot obtain summary judgment on that basis.
In any event, the facts JPMorgan cites as grounds for its speculation do not support its
counterfactual theory. See Br. 25-26. The fact that Chain Bridge placed a temporary “hold” on
the wired funds shortly after receiving them is not evidence that it never would have paid Blue
Flame if JPMorgan had not cancelled the payment order. To the contrary, Brough explained that
Chain Bridge’s hold would have continued only until its investigation was complete, and that he
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would have consulted legal counsel on whether it had to pay Blue Flame the day after the wire was
received. CSUF ¶ 46. Nor is JPMorgan’s speculation supported by the fact that Chain Bridge was
investigating the transaction consistent with the Bank Secrecy Act. See CSUF ¶¶ 5, 46. There is
no evidence that if JPMorgan had cleared the wire for payment to Blue Flame, instead of cancelling
it, Chain Bridge would have sent the funds back to JPMorgan anyway.
There likewise is no basis for JPMorgan’s assertion (Br. 19-20, 25) that Chain Bridge’s
internal wire transfer policy compelled Chain Bridge to return the funds even if JPMorgan had not
issued its reversal. The relevant passage, which JPMorgan fails to quote in full, provides: “If the
Bank notices a discrepancy between the beneficiary account number and the beneficiary name, the
Bank reserves the right to return the wire although it is not obligated to do so. If there is any
question as to the beneficiary’s right to the funds, such as a discrepancy between name and account
number, the wire will be returned.” CSUF ¶ 8 (emphasis added). JPMorgan would transform that
internal policy—the express purpose of which is to remind bank employees that they have the
right, but not the obligation, to return funds in certain circumstances—into a binding legal
requirement that the bank return funds even without any request to do so from their sender. This
sort of internal procedural guidance, not to mention the policy’s actual text, do not bear that weight.
II.
JPMorgan Is Not Entitled To Summary Judgment On Chain Bridge’s Unjust
Enrichment Claim (Count III)
In the unlikely event that Chain Bridge is liable for damages to Blue Flame, and
indemnification against JPMorgan is unavailable, JPMorgan will have been unjustly enriched at
Chain Bridge’s expense. JPMorgan’s contrary argument is based on the proposition that Chain
Bridge conferred no benefit on JPMorgan when it returned the wire transfer because JPMorgan
ultimately credited those funds to California’s account. Br. 27. But Chain Bridge sent
$456,888,600 to JPMorgan, not to California, when it returned those funds at JPMorgan’s request.
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The funds immediately became JPMorgan’s property, and conferred a benefit on it. JPMorgan
correctly acknowledges (at Br. 26) that a party’s acceptance or retention of a benefit can result in
its liability for unjust enrichment.7
In any event, JPMorgan “retained” those funds even after it credited them to California’s
bank account. Funds credited to a depositor’s account remain the bank’s property, offset by the
bank’s obligation to pay its depositor according to the account’s terms. See Terry v. Bank of Am.,
N.A., 350 F. Supp. 2d 727, 730 (W.D. Va. 2004) (funds are deposited in a customer’s bank account
remain “the property of the bank”); Bernardini v. Cent. Nat’l Bank of Richmond, 290 S.E.2d 863,
864 (Va. 1982) (“[M]oneys deposited immediately become the property of the bank, and the [bank]
becomes debtor of the depositor.”). There is no evidence that the funds are no longer JPMorgan’s
property, or that JPMorgan is otherwise unable to satisfy a judgment for Chain Bridge.
Finally, JPMorgan asserts that it would be inequitable to “reward” Chain Bridge with an
unjust enrichment judgment against JPMorgan. Br. 28. That is exactly backwards. If Blue Flame
is entitled to damages from Chain Bridge because Chain Bridge agreed to return the wire transfer
to JPMorgan, and if Section 4A-211(f) indemnification is not available, then the only possible
“inequity” would result from saddling Chain Bridge with that liability while JPMorgan keeps the
money. On that same reasoning, in fact, JPMorgan is simultaneously asserting that “[e]quity . . .
requires [California] to make JPMC whole,” and that California is “fully responsible” to it for any
losses that JPMorgan sustains because of California’s cancellation of its payment order to
JPMorgan. CSUF ¶ 63(g).
7 JPMorgan later asserts that “the requirement is that Chain Bridge confer a benefit on JPMC
and that JPMC retain the benefit.” Br. 27 (first emphasis omitted). To the extent that JPMorgan
means to contradict its earlier, correct statement of the law—that either acceptance or retention is
required, see Br. 26 (quoting Anderson v. Fluor Intercontinental, Inc., No. 1:19-cv-0289, 2021
WL 837335, at *14 (E.D. Va. Jan. 4, 2021))—it was right the first time.
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CONCLUSION
JPMorgan’s motion for summary judgment should be denied as to all three counts in Chain
Bridge’s Third-Party Complaint.
Date: May 20, 2021
Respectfully submitted,
/s/ Donald Burke
Gary A. Orseck (admitted pro hac vice)
Matthew M. Madden (admitted pro hac vice)
Donald Burke (VA Bar No. 76550)
ROBBINS, RUSSELL, ENGLERT,
ORSECK
& UNTEREINER LLP
2000 K Street, N.W., 4th Floor
Washington, D.C. 20006
Tel: (202) 775-4500
Fax: (202) 775-4510
dburke@robbinsrussell.com
Counsel for Third-Party Plaintiff Chain
Bridge Bank, N.A.
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CERTIFICATE OF SERVICE
I hereby certify that on May 20, 2021, I will electronically file the foregoing with the Clerk
of Court using the CM/ECF system, which will then send a notification of such filing to the
following:
Peter H. White, Esq. (VA Bar No. 32310)
SCHULTE ROTH & ZABEL LLP
901 Fifteenth Street, NW, Suite 800
Washington, DC 20005
Phone: (202) 729-7476
Fax: (202) 730-4520
Email: peter.white@srz.com
Counsel for Plaintiff
Meredith K. Loretta, Esq. (VA Bar No. 92369)
WILMER CUTLER PICKERING HALE &
DORR LLP
1875 Pennsylvania Avenue NW
Washington, DC 20006
Phone: (212) 663-6981
Email: meredith.loretta@wilmerhale.com
Counsel for Third-Party Defendant
/s/ Donald Burke
Donald Burke (VA Bar No. 76550)
ROBBINS, RUSSELL, ENGLERT,
ORSECK & UNTEREINER LLP
2000 K Street, N.W., 4th Floor
Washington, D.C. 20006
Tel: (202) 775-4500
Fax: (202) 775-4510
dburke@robbinsrussell.com
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