21-487
In re: Citibank August 11, 2020

PARK, Circuit Judge, concurring in the judgment (amended):

       When people receive money by mistake, the law usually
requires them to give it back.           This commonsense rule allows
transferors to reclaim property that rightfully belongs to them—
whether misdirected funds, 1 an accidental overpayment, 2 or a credit
to the wrong bank account. 3        An exception to the general rule can
sometimes protect a recipient who was owed the mistakenly paid
money.     Under this narrow equitable defense, called “discharge for
value,” a creditor who receives a payment in discharge of a debt he is
owed can defeat restitution by invoking his own competing claim to
the disputed funds.      But here, Defendants had no such claim—not
when they received Citibank’s money, and not when they were asked
to give it back—because they were not entitled to payment for another
three years after Citibank erroneously sent them half a billion dollars.
Allowing them to keep that money would turn equity on its head and
topple the settled expectations of participants in the multitrillion-
dollar corporate-debt market.       It would also be brutally unfair.



       1
        E.g., Home Sav. Bank v. Rolando, 

, 824 (R.I. 1940) (sum of
money paid by a bank to the executor of the late Francisco Marsicano was
erroneously drawn from an account that “in fact . . . belonged to another
man by the name of Francisco Marsicano”).
       2 E.g., PaineWebber, Inc. v. Levy, 

, 798–800 (N.J. Super. Ct.
Law Div. 1995) (seller of stock received proceeds for 100 times his number
of shares due to an unprocessed reverse stock split).
       3
         E.g., Citibank, N.A. v. Warner, 

, 823 (Sup. Ct. 1981)
(“[T]he bank inadvertently microencoded the defendant’s account number
010 22666 thereon, instead of the account number of the [intended recipient]
109 22666.”).
      In my view, this is a straightforward case that many smart
people have grossly overcomplicated.        The Court ultimately arrives
at the correct conclusion but only after taking an unnecessary detour
through the factual record.     I agree with the majority that the district
court clearly erred in concluding that there were insufficient red flags
to put Defendants on notice of Citibank’s mistake.       I also agree that
the district court erred as a matter of law in its overreading of Banque
Worms.    But Defendants’ case fails on a more basic level: A recipient
of mistakenly transferred funds cannot invoke the discharge-for-
value defense—a general legal rule incorporated by the Restatement
(First) of Restitution and the New York Court of Appeals—unless and
until it has a present entitlement against the debtor.    Put simply, you
don’t get to keep money sent to you by mistake unless you’re entitled
to it anyway.   I respectfully concur only in the judgment.

                         I.   BACKGROUND

      On August 11, 2020, Citibank set out to process a $7.8 million
interest payment to the lenders of its client Revlon, Inc., a global
cosmetics company.     But instead, Citibank inadvertently wired the
entire principal balance of the loan—nearly $1 billion—from the
bank’s own account.           Some recipients gave the funds back.
Defendants (“the Creditors”), managers who controlled over $500
million of the mistakenly transferred funds, did not.      Citibank sued,
lost at a bench trial, and appealed to this Court.

A.    Revlon’s Debt Dispute

      In 2016, Revlon took out a $1.8 billion loan (the “2016 Term
Loan”) to finance its purchase of Elizabeth Arden, Inc., another
cosmetics brand.    A syndicate of lenders agreed (under the “2016
Term Loan Agreement”) to provide the funds in exchange for

                                     2
periodic interest payments and a return of principal on September 7,
2023, the maturity date.   Revlon offered certain intellectual property
(“IP”) as collateral.

        In addition to