Coast sues Wells Fargo over inadvertent deposits.

Coast sues Wells Fargo over inadvertent deposits

If bankers get mad, they withhold each other's funds

Its an old-fashioned bank war in the Wild West: Los Angeles thrift Coast Savings has sued Wells Fargo, accusing the San Francisco bank of conversion and "willful, malicious and wanton disregard of Coast's rights" -- all over $92,000 Coast mistakenly wired to a defunct Wells Fargo account last October. Wells Fargo won't return it.

Problems began in August of 1989 when a regular Coast commercial borrower, General Circuits Inc. of Menlo Park, directed the thrift to wire loans to its new account with San Carlos-based Eureka Federal Savings & Loan Association.

A Coast subsidiary, CoastFed Business Credit Corp. in Los Angeles, instead wired $92,000 to General Circuit's old account at a Wells Fargo in Redwood City.

The money, in amounts adding up to $92,000, was wired on three separate dates, Oct. 16, Oct. 19, and Oct. 20, said Coast.

In its suit, Coast described the wire transfer of $92,000 to Wells Fargo as a "mistake" and "accidental."

On Oct. 24 Coast wired Wells Fargo three separate times to demand Wells Fargo return the money, but instead, Wells Fargo "wrongfully refused to comply with Coast's demand and instead appropriated the Funds to Wells Fargo's own use," alleges Coast.

As a result of the snafu, Coast had to lend $92,000 of its own money to General Circuits, the thrift said.

According to an exhibit attached to the Coast suit, Wells Fargo wired CoastFed that it was "unable to return funds due to unsufficient balance in the account. We closed our files." A second wire conveyed the same message, but ended with the word "regards."

Coast Vice President of Treasury Services Laird Doherty wrote Oscar Orozco, Vice President of Wells Fargo in Redwood City, on Oct. 27 and demanded repayment of the $92,000, threatened legal action and wrote that since "Wells Fargo has been notified by Coast Savings that the funds were sent in error, the application of the funds against a customer's insufficient account balance is without authority and constitute an unlawful misappropriation of funds belonging to Coast Savings, a federally insured Savings and Loan Association."

Last week a Coast official said the suit was filed only as a last recourse against Wells Fargo. "When you get to the point you realize you won't be able to resolve a matter out of court, then you have to file a suit," said Carolyn Morgan, associate counsel at Coast Savings. "In this particular case, we got to that point."

The West Los Angeles-based law firm of Perkins Coie is bringing the suit on Coast's behalf.

Wells Fargo declined to comment on the Coast matter.