Golden West v. Suntrust

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GOLDEN WEST REFINING COMPANY, 
a California corporation,
No. 06-56006
Plaintiff-Appellee,
v.  D.C. No.
CV-05-01550-FMC
SUNTRUST BANK, a Georgia State
OPINION
chartered bank,
Defendant-Appellant.

Appeal from the United States District Court
for the Central District of California
Florence-Marie Cooper, District Judge, Presiding
Argued and Submitted
March 7, 2008—Pasadena, California
Filed August 18, 2008
Before: J. Clifford Wallace, Ronald M. Gould, and
Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Gould
10919
10922 GOLDEN WEST REFINING v. SUNTRUST BANK
COUNSEL
Susan A. Mitchell, Frederick A. Clark, McKenna Long &
Aldridge LLP, Los Angeles, California, for the defendant-
appellant.
Dennis B. Arnold, Marjorie E. Lewis, and Sarah F. Powers,
Gibson, Dunn & Crutcher LLP, Los Angeles, California, for
the plaintiff-appellee.
OPINION
GOULD, Circuit Judge:
SunTrust Bank (“SunTrust”) appeals the district court’s
judgment in favor of Golden West Refining Company
(“Golden West”) in an action brought by Golden West to
draw on a letter of credit issued to it by SunTrust’s predeces-
sor Crestar Bank (“Crestar”). SunTrust argues that the district
court erred (1) by holding that the letter of credit was not
“perpetual” under Uniform Commercial Code (“UCC”) § 5-
106(d) and thereby had not automatically expired before Gol-
den West made a draw against it, (2) by rejecting SunTrust’s
waiver argument, and (3) by concluding that Golden West’s
specific performance and breach of contract claims were not
precluded by the exclusive remedies available under Article
5 of the UCC. We have jurisdiction pursuant to 28 U.S.C.
§ 1291, and we affirm.
I
In 1998, CENCO, Inc. (“CENCO”) acquired, among other
assets, two leases from Golden West that resulted in the exe-
cution of a May 11, 1998 Letter Agreement (“the Letter
Agreement”). CENCO is a corporation wholly owned by a
trust (“UniTrust”) of which Pat Robertson is the trustee. The
GOLDEN WEST REFINING v. SUNTRUST BANK 10923
Letter Agreement obligated CENCO to defend, indemnify,
and hold Golden West harmless against any claims arising
from the liabilities imposed on Golden West as tenant under
the leases. To secure performance by CENCO of these duties,
the Letter Agreement required CENCO to obtain a $5 million
irrevocable letter of credit. The Letter Agreement required
Golden West to terminate the letter of credit upon satisfaction
of the conditions relating to the leases.
In May 1998, UniTrust requested that Crestar, the pre-
decessor of SunTrust, issue a $5 million letter of credit on
CENCO’s account. On May 21, 1998, Crestar issued the
irrevocable letter of credit. It stated, in pertinent part:
THIS LETTER OF CREDIT SHALL EXPIRE ONE
YEAR FROM THE DATE HEREOF PROVIDED
HOWEVER, THAT IT SHALL BE DEEMED
AUTOMATICALLY RENEWED WITHOUT
AMENDMENT FOR ADDITIONAL ONE YEAR
PERIODS FROM THE PRESENT OR ANY
FUTURE EXPIRATION DATE HEREOF,
UNLESS AT LEAST 30 DAYS PRIOR TO ANY
SUCH DATE(S), GOLDEN WEST REFINING
COMPANY SHALL HAVE SENT CRESTAR
BANK NOTICE BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, OR OVERNIGHT COU-
RIER SERVICE, THAT GOLDEN WEST REFIN-
ING COMPANY ELECTS NOT TO REQUIRE
THIS LETTER OF CREDIT RENEWED FOR ANY
SUCH ADDITIONAL PERIOD.
The letter of credit also contained an express provision for ter-
mination that required the consent of both Golden West and
CENCO:
THE AMOUNT OF THIS LETTER OF CREDIT
SHALL BE REDUCED OR TERMINATED ON
RECEIPT BY CRESTAR BANK OF A NOTA-
10924 GOLDEN WEST REFINING v. SUNTRUST BANK
RIZED WRITTEN AGREEMENT SIGNED BY A
VICE PRESIDENT OF GOLDEN WEST REFIN-
ING COMPANY AND A VICE PRESIDENT OF
CENCO AUTHORIZING SUCH REDUCTION OR
TERMINATION.
UniTrust signed a Negative Pledge Agreement under which it
agreed to maintain liquid assets in a specified amount, free of
encumbrances, while the letter of credit was in effect. Crestar
believed, based on representations by Pat Robertson, that the
letter of credit would only be outstanding for ninety days.
In Spring 2001, SunTrust advised Robertson that it would
not renew the letter of credit unless Robertson secured it.
Suzanne Franklin, an employee of SunTrust responsible for
cultivating the bank’s relationship with Robertson and
UniTrust, testified by deposition that she received a call from
CENCO’s in-house counsel stating that UniTrust was think-
ing about suing Golden West. On April 2, 2001, CENCO filed
an action against Golden West in the Superior Court of the
State of California for the County of Los Angeles, alleging
that Golden West had improperly failed to terminate the letter
of credit. In May 2001, SunTrust told Robertson that UniTrust
must either provide collateral to secure the letter of credit or
transfer it to another bank. After being informed by Robertson
that there soon would be an order from the Superior Court
requiring Golden West to consent to cancellation, SunTrust
agreed to give UniTrust an additional ninety days to deliver
collateral to secure the letter of credit. During the state court
action, CENCO forwarded to SunTrust copies of status
reports drafted by CENCO’s counsel, one of which recited
that Golden West claimed that it had not been properly served
in the state court action. On June 4, 2001, the Superior Court
entered Golden West’s default for failure to answer CENCO’s
complaint.
On July 12, 2001, the Superior Court ordered that Golden
West by default consented to the termination of the letter of
GOLDEN WEST REFINING v. SUNTRUST BANK 10925
credit on its behalf by SunTrust and held that the letter of
credit was released. On July 13, 2001, Robertson by facsimile
sent SunTrust a copy of the default judgment, with a letter
requesting immediate termination of the credit. That same
day, SunTrust’s in-house counsel telephoned CENCO’s coun-
sel to determine whether there was any waiting period before
a default judgment became effective. SunTrust’s in-house
counsel knew that SunTrust was not a party to the action in
the Superior Court, and did not believe that the Superior
Court had jurisdiction over SunTrust. SunTrust’s in-house
counsel did not know and did not inquire whether Golden
West had notice of the default judgment before advising that
SunTrust cancel the letter of credit. At Robertson’s request,
SunTrust then terminated the credit. On July 14, 2001, Frank-
lin advised Robertson that SunTrust had cancelled the letter
of credit effective July 12, 2001.
On July 20, 2001, the Superior Court by order vacated the
default judgment. On October 2, 2001, the Superior Court
entered another order, providing:
(1) The Letter of Credit shall be, and hereby is, rein-
stated as it exited [sic] on July 12, 2001, immedi-
ately prior to entry of the subsequently vacated
default judgment herein; and
(2) Plaintiffs [CENCO]: (a) shall take all actions and
do all things reasonably necessary or appropriate to
effectuate the provisions of paragraph 1 above; (b)
shall fully cooperate, as reasonably requested by
Golden West, with Golden West’s efforts to effectu-
ate the provisions of paragraph 1 above; and (c) shall
not interfere with any efforts by Golden West to
effectuate the provisions of paragraph 1 above.
Despite CENCO’s request that SunTrust reinstate the
credit, SunTrust did not reinstate the letter of credit because
neither CENCO nor UniTrust offered SunTrust adequate col-
10926 GOLDEN WEST REFINING v. SUNTRUST BANK
lateral. UniTrust refused to reinstate the Negative Pledge, or
to provide any other security, taking the position that the letter
of credit had terminated properly on July 12, 2001.
During 2004 and 2005, the lessor of the properties leased
by Golden West demanded that Golden West comply with the
terms of its lease, an obligation for which CENCO had agreed
to indemnify Golden West under the Letter Agreement. On
January 12, 2005, Golden West demanded that CENCO
deliver to the lessor the requisite funds. After CENCO failed
to do so, on February 2, 2005, Golden West made a draw on
the letter of credit for $1,020,000. SunTrust dishonored the
letter of credit on February 8, 2005, on the grounds that it had
been cancelled pursuant to the default judgment and that it
was “perpetual” and therefore had expired under UCC § 5-
106(d). SunTrust’s dishonoring of the letter of credit, reject-
ing Golden West’s draw, precipitated this dispute.
Golden West brought this action in the federal district
court, asserting diversity jurisdiction. It claimed in its
amended complaint wrongful dishonor of the letter of credit
and breach of contract, and requested specific performance
and declaratory relief. On May 22, 2006, the district court
gave summary judgment to Golden West and denied Sun-
Trust’s motion for summary judgment. The district court con-
cluded that, under UCC § 5-106(d), the letter of credit was not
perpetual and therefore had not expired and was still in effect
on the date of the draw. The district court also held that the
Superior Court’s default judgment was ineffective because
Golden West had not consented to cancellation of the letter of
credit as required in the Letter Agreement. The district court
also held that Golden West had not waived its right to compel
CENCO to follow the Superior Court orders reinstating the
letter of credit because the default judgment had not given
SunTrust license to terminate the letter of credit. In a judg-
ment entered July 6, 2006, the district court awarded Golden
West damages, including consequential damages, for its
GOLDEN WEST REFINING v. SUNTRUST BANK 10927
wrongful dishonor, breach of contract, and specific perfor-
mance claims. SunTrust appealed.
II
We review de novo a district court’s summary judgment.
See, e.g., Universal Health Servs. Inc. v. Thompson, 363 F.3d
1013, 1019 (9th Cir. 2004). On review, we view the evidence
in the light most favorable to the nonmoving party and deter-
mine whether there are any genuine issues of material fact and
whether the district court correctly applied the relevant sub-
stantive law. See Olsen v. Idaho State Bd. of Med., 363 F.3d
916, 922 (9th Cir. 2004).
We also review de novo a district court’s interpretation of
state law. Edmonds v. Hammett, 450 F.3d 917, 925 n.8 (9th
Cir. 2006). When interpreting state law, we must follow the
decisions of the state’s highest court, but when the state
supreme court has not spoken on an issue, we are “not pre-
cluded from affording relief” and “must determine what result
the [state supreme] court would reach based on state appellate
court opinions, statutes and treatises.” See Hewitt v. Joyner,
940 F.2d 1561, 1565 (9th Cir. 1991) (internal quotation marks
and citation omitted).
III
SunTrust argues that the letter of credit it issued to Golden
West on May 21, 1998 was a perpetual letter under Article 5
of the UCC1 and therefore expired five years after it was
issued and about two years before Golden West made a draw
on the letter of credit on February 2, 2005. The district court
1
The letter of credit at issue here is subject to the Uniform Customs and
Practice for Documentary Credits (“UCP”). The UCP, however, contains
no provision regarding “perpetual” letters of credit. Both parties agree that
in light of the silence of the UCP, the UCC applies to determine the valid-
ity of the letter of credit.
10928 GOLDEN WEST REFINING v. SUNTRUST BANK
concluded that the letter of credit was not perpetual because
so long as a letter of credit “articulates an expiration date,
albeit one that renews automatically and terminates only upon
notice by the beneficiary, the Letter of Credit cannot be said
to be perpetual.” We agree with the district court and hold that
the plain language of UCC § 5-106(d) requires that a letter of
credit state that it is perpetual to qualify as a perpetual letter
of credit.
[1] Section 5-106 of the UCC2 prescribes rules regarding
letters of credit:
(a) A letter of credit is issued and becomes
enforceable according to its terms against the issuer
when the issuer sends or otherwise transmits it to the
person requested to advise or to the beneficiary. A
letter of credit is revocable only if it so provides.
(b) After a letter of credit is issued, rights and obli-
gations of a beneficiary, applicant, confirmer, and
issuer are not affected by an amendment or cancella-
tion to which that person has not consented except to
the extent the letter of credit provides that it is revo-
cable or that the issuer may amend or cancel the let-
ter of credit without that consent.
(c) If there is no stated expiration date or other pro-
vision that determines its duration, a letter of credit
expires one year after its stated date of issuance or,
if none is stated, after the date on which it is issued.
2
Crestar issued the letter of credit in Virginia and delivered it to Golden
West in California. Both California and Virginia have adopted the UCC,
including all provisions of Article 5 relevant to this appeal, in their respec-
tive state codes. We therefore refer to the UCC generally, as opposed to
a specific section of Virginia or California code. Because there is no mate-
rial difference in Virginia and California case law interpreting the UCC as
codified, we cite both California and Virginia case law to support our
decision.
GOLDEN WEST REFINING v. SUNTRUST BANK 10929
(d) A letter of credit that states that it is perpetual
expires five years after its stated date of issuance, or
if none is stated, after the date on which it is issued.
UCC § 5-106 (emphasis added). We must give effect to the
language of a statute if it is plain and unambiguous. See Tex-
aco Inc. v. United States, 528 F.3d 703, 707 (9th Cir. 2008)
(“ ‘The [interpretive] inquiry ceases if the statutory language
is unambiguous and the statutory scheme is coherent and con-
sistent.’ ” (quoting Barnhart v. Sigmon Coal Co., Inc., 534
U.S. 438, 450 (2002))); Catholic Mut. Relief Soc’y v. Superior
Court, 42 Cal. 4th 358, 369 (2007) (“If the language of a stat-
ute is clear and unambiguous there is no need for construc-
tion, nor is it necessary to resort to indicia of the intent of the
Legislature.” (internal quotation marks, alteration, and cita-
tion omitted)); Marsh v. City of Richmond, 234 Va. 4, 11
(1987) (“[I]f statutory language is not ambiguous but has a
usual and plain meaning, rules of construction do not apply
and resort to legislative history is both unnecessary and
improper. Instead, we determine legislative intent from the
plain meaning of the words used.”). The plain meaning of “to
state” is “to express in words.” See MERRIAM-WEBSTER’S COL-
LEGIATE DICTIONARY (11th ed. 2005). Applying this definition
to UCC § 5-106(d), a letter of credit is only perpetual if it
expresses in words that it is perpetual. This, as Golden West
concedes, means that a letter of credit can be perpetual with-
out using the exact word “perpetual,” and instead using syno-
nyms that clearly declare that the letter of credit will remain
outstanding in perpetuity, but it is essential that the words of
the letter of credit definitively provide it will continue in per-
petuity.
[2] Here, we see no ambiguity. Under the plain meaning of
the word “states,” SunTrust’s letter of credit is not perpetual.
SunTrust’s letter of credit “states” to the contrary that it “shall
expire one year from the date hereof provided however, that
it shall be deemed automatically renewed without amendment
for additional one year periods . . . unless . . . Golden West
10930 GOLDEN WEST REFINING v. SUNTRUST BANK
. . . elects not to require this letter of credit renewed.” Thus,
the letter of credit recites that it will expire,3 that it will not
continue perpetually, either when Golden West elects not to
renew or when SunTrust receives a written agreement by both
Golden West and CENCO authorizing the termination.
Although the matter is not entirely free from doubt because of
the automatic renewal provision, we conclude that under the
plain language of § 5-106(d), the letter of credit is not perpet-
ual. To interpret the law governing letters of credit in such a
nonliteral way as is urged by SunTrust would introduce grave
uncertainties into the use of letters of credit and impair their
utility for domestic or foreign commerce.
SunTrust argues that this approach to the UCC is at odds
with the intentions of the drafters of Article 5 and the primary
purpose of letter of credit law—namely, to limit letters of
credit of unlimited duration. As such, SunTrust urges us to
adopt a functional and broad definition of “states that it is per-
petual.” But, if the word “states” in UCC § 5-106(d) is inter-
preted, as SunTrust advocates, so that letters of credit like that
at issue here are perpetual, portions of other sub-sections of
UCC § 5-106 will be rendered superfluous, in contravention
of the rules of statutory interpretation. See Bosley Med. Inst.,
Inc. v. Kremer, 403 F.3d 672, 681 (9th Cir. 2005) (“We try
to avoid, where possible, an interpretation of a statute that
renders any part of it superfluous and does not give effect to
all of the words used by [the legislature].” (internal quotation
marks and citation omitted)); Big Creek Lumber Co. v.
County of Santa Cruz, 38 Cal. 4th 1139, 1155 (2006)
(“ ‘Courts should give meaning to every word of a statute if
possible, and should avoid a construction making any word
surplusage.’ ” (alteration omitted) (quoting Arnett v. Dal
Cielo, 14 Cal. 4th 4, 22 (1996))); Cook v. Commonwealth,
268 Va. 111, 114 (2004) (“Words in a statute should be inter-
preted, if possible, to avoid rendering words superfluous.”).
3
SunTrust does not dispute that the letter of credit in this case states an
expiration date, and thus is not governed by UCC § 5-106(c).
GOLDEN WEST REFINING v. SUNTRUST BANK 10931
Under UCC § 5-106(c), a letter of credit expires one year after
issuance if there is either no stated expiration date or no other
provision that determines its duration. UCC § 5-106(c). This
sub-section thereby contemplates two methods to avoid expi-
ration of a letter of credit one year after issuance: the letter of
credit could (1) “state” an expiration date; or (2) include
another provision that determines its duration. Id. In other
words, subsection (c) is the default provision if a letter of
credit has no termination date or other measure of its duration;
subsection (d) is the default provision if a letter of credit
states that it is perpetual. If the interpretation of UCC § 5-
106(d) advocated by SunTrust is applied to UCC § 5-106(c),
then the second method to avoid expiration of a letter of credit
one year after its issuance—namely, including in the letter of
credit a provision that determines its duration—would be
superfluous. Our interpretation of § 5-106(d), on the other
hand, gives effect to the second prong of § 5-106(c).
[3] Finally, SunTrust asks us to interpret the Official Com-
ments accompanying UCC § 5-106 to conclude that Sun-
Trust’s letter of credit is perpetual. Official Comment 4 states,
in pertinent part, “A letter of credit that may be revoked or
terminated at the discretion of the issuer by notice to the bene-
ficiary is not ‘perpetual.’ ” UCC § 5-106, Official Comment
4. SunTrust suggests that by explaining that letters of credit
that provide for revocation or termination at the discretion of
the issuer are not perpetual, the Official Comment implies that
letters of credit that provide for revocation or termination only
at the discretion of the beneficiary are perpetual, and there-
fore fall within the limitations of UCC § 5-106(d). We reject
this argument. The absence of an official comment addressing
renewal clauses controlled by the beneficiary does not make
such letters of credit perpetual. As Golden West notes, the
drafters of Article 5 of the UCC could have included Official
Comment 4 specifically to protect a particular type of letter of
credit—evergreen credits4 —and not to indicate that all other
4
An evergreen letter of credit “is effective for a designated period, usu-
ally one year, and will be renewed automatically for an additional period,
10932 GOLDEN WEST REFINING v. SUNTRUST BANK
letters of credit that contain renewal clauses terminated at the
discretion of the beneficiary are perpetual. We will not specu-
late what the drafters intended by electing not to comment on
a particular type of letter of credit. See, e.g., Texaco, 528 F.3d
at 707. We conclude that the language of the statute supports
the district court’s interpretation of UCC § 5-106(d). We hold
that under UCC § 5-106(d), the letter of credit in this case was
not perpetual and therefore did not expire five years after its
stated date of issuance.
IV
Both Golden West and SunTrust presented waiver claims
before the district court, and both challenge the district court’s
waiver decisions. We affirm the district court’s rejection of
both waiver claims.
A
SunTrust raised as an affirmative defense that Golden West
waived any right to enforce the letter of credit. Golden West
argued that SunTrust waived this affirmative defense by not
asserting it in the notice of dishonor as Golden West alleges
is required under UCC § 5-108. The district court determined
that SunTrust did not waive its affirmative defense of waiver.
Golden West challenges the district court’s determination.
[4] Section 5-108 states, in pertinent part:
(a) Except as otherwise provided in Section 5-109,
an issuer shall honor a presentation that, as deter-
mined by the standard practice referred to in subsec-
tion (e), appears on its face strictly to comply with
unless the issuer gives notice of its decision not to renew prior to an expi-
ry.” 1 JOHN F. DOLAN, THE LAW OF LETTERS OF CREDIT, ¶ 5.03[3][b] n.232
(4th ed. 2007).
GOLDEN WEST REFINING v. SUNTRUST BANK 10933
the terms and conditions of the letter of credit.
Except as otherwise provided in Section 5-113 and
unless otherwise agreed with the applicant, an issuer
shall dishonor a presentation that does not appear so
to comply.
(b) An issuer has a reasonable time after presenta-
tion, but not beyond the end of the seventh business
day of the issuer after the day of its receipt of docu-
ments: (1) to honor, (2) if the letter of credit provides
for honor to be completed more than seven business
days after presentation, to accept a draft or incur a
deferred obligation, or (3) to give notice to the pre-
senter of discrepancies in the presentation.
(c) Except as otherwise provided in subsection (d),
an issuer is precluded from asserting as a basis for
dishonor any discrepancy if timely notice is not
given, or any discrepancy not stated in the notice if
timely notice is given.
(d) Failure to give the notice specified in subsec-
tion (b) or to mention fraud, forgery, or expiration in
the notice does not preclude the issuer from asserting
as a basis for dishonor fraud or forgery as described
in Section 5-109(a) or expiration of the letter of
credit before presentation.
UCC § 5-108. Relying on sub-section (c), Golden West
argues that because SunTrust did not give timely notice of the
“discrepancy” that Golden West had waived its right to draw
on the letter of credit in SunTrust’s notice of dishonor, Sun-
Trust is precluded now from asserting waiver as a defense to
dishonor. Golden West notes that “waiver” is not listed in
sub-section (d), which lists types of claims that may be
asserted after the initial notice of dishonor. Therefore, Golden
West contends that waiver must be asserted in the initial
notice of dishonor or else it is waived under sub-section (c).
10934 GOLDEN WEST REFINING v. SUNTRUST BANK
The district court rejected this claim, concluding that the “dis-
crepancy” referred to in UCC § 5-108(c) relates not to a gen-
eral problem with the attempted draw on the letter of credit,
but only to an asserted discrepancy in the presentation of doc-
uments necessary for a draw on the letter of credit. The dis-
trict court determined, therefore, that UCC § 5-108(c) did not
apply to SunTrust’s claim that Golden West waived its right
to enforce the letter of credit.
[5] Here, unlike the “states that it is perpetual” language of
UCC § 5-106(d), the meaning of the word “discrepancy” in
UCC § 5-108 is not clear when viewing sub-section (c) in iso-
lation. We therefore must consider the entirety of UCC § 5-
108 to determine the meaning of “discrepancy.” See People
v. Allen, 42 Cal. 4th 91, 102 (2007) (quoting Pulcifer v.
County of Alameda, 29 Cal. 2d 258, 262 (1946)) (“ ‘In the
absence of express language, the intent [of the Legislature]
must be gathered from the terms of the statute construed as a
whole, from the nature and character of the act to be done,
and from the consequences which would follow the doing or
failure to do the particular act at the required time.’ ”); see
also Va. Elec. & Power Co. v. Bd. of County Supervisors, 226
Va. 382, 387-88 (1983) (“[I]t is our duty to interpret the sev-
eral parts of a statute as a consistent and harmonious whole
so as to effectuate the legislative goal.”).
[6] Looking to other sub-sections of UCC § 5-108 for guid-
ance, the district court observed that sub-section (b) uses the
language “to give notice to the presenter of discrepancies in
the presentation.” UCC § 5-108(b)(3) (emphasis added). Sub-
section (b) describes the three courses of action an issuer must
take within seven days of a draw on the letter of credit, and
sub-section (c) defines the consequences of taking or failing
to take those actions. Because under sub-section (b) the only
discrepancies an issuer is required to state in the notice of dis-
honor are “discrepancies in the presentation,” we hold that
those are the only discrepancies that are waived under sub-
section (c) if not included in the notice of dishonor.
GOLDEN WEST REFINING v. SUNTRUST BANK 10935
[7] This construction of the statute also explains the inclu-
sion of fraud, forgery, and expiration, and the absence of
waiver, in sub-section (d). See UCC § 5-106(d). Fraud, for-
gery and expiration are all discrepancies in the presentation—
they are challenges to the actual presentation—whereas the
waiver claim here is an equitable challenge, separate from the
presentation submitted by the beneficiary, regarding the right
of the beneficiary to attempt a draw on the letter of credit after
three years of inaction following the Superior Court’s order
reinstating the letter of credit. The Official Comments of UCC
§ 5-108 support this distinction. Official Comment 3 classifies
expiration as a “discrepancy of tardy presentation.” UCC § 5-
108, Official Comment 3. Therefore, the listing in sub-section
(d) of expiration as a defense that need not be asserted in the
notice of dishonor does not require construing “discrepancy”
in sub-section (c) more broadly than discrepancies in the pre-
sentation. Accordingly, we reject Golden West’s argument
that the district court’s interpretation of “discrepancy” in sub-
section (c) is inconsistent with sub-section (d).
B
Because SunTrust did not waive its claim that Golden West
waived its right to enforce the letter of credit, we next address
SunTrust’s waiver claim. SunTrust alleges that Golden West
waived any right of action it had by failing, for three years
after entry of the Superior Court’s October 2, 2001 order rein-
stating the letter of credit, to take any action to ensure
CENCO’s compliance with the order, or to otherwise seek
reinstatement of the letter of credit. The Superior Court’s
order required CENCO to take all actions necessary to effec-
tuate the reinstatement of the letter of credit and to cooperate
with any efforts made by Golden West to have the letter of
credit reinstated. SunTrust argues that because CENCO and
Golden West knew that the Superior Court had no jurisdiction
to order reinstatement of the letter of credit by SunTrust, and
that SunTrust would not reinstate the letter unless adequate
security for the credit was posted, and yet Golden West took
10936 GOLDEN WEST REFINING v. SUNTRUST BANK
no action to ensure its reinstatement, Golden West waived its
right to recover under the letter of credit.
[8] “[W]aiver is the intentional relinquishment or abandon-
ment of a known right.” In re S.B., 32 Cal. 4th 1287, 1293 n.2
(2004) (internal quotation marks and citation omitted); see
also Magruder v. Commonwealth, 275 Va. 283, 303 (2008).
The district court concluded that “[t]he ‘known right’ which
SunTrust asserts was waived never in fact existed.” Following
its determination that the irrevocable letter of credit at issue
in this case had not been validly cancelled by SunTrust on
July 12, 2001, the district court reasoned that Golden West’s
inaction with regard to seeking to compel CENCO to follow
the October 2, 2001 order was consistent with Golden West’s
position that it had no obligation to seek such action because
the letter of credit was never cancelled. The district court sup-
ported this reasoning by emphasizing that SunTrust’s waiver
argument would present Golden West with a Catch-22 sce-
nario: had Golden West “sought such action, SunTrust would
presumably be arguing today that Golden West agreed that
the July 12, 2001 Order gave it license to terminate the Letter
of Credit.”
SunTrust argues that the district court conflated the validity
of SunTrust’s cancellation of the letter of credit with its effec-
tiveness. SunTrust concedes that its cancellation was invalid,
but argues that Golden West had notice that SunTrust had in
fact cancelled the letter of credit and for that reason Golden
West promptly asked the Superior Court to have the letter of
credit reinstated. In its October 2001 order, the Superior Court
ordered CENCO to “take all actions and do all things reason-
ably necessary” to reinstate the letter of credit. Armed with
this order and the knowledge that SunTrust had cancelled,
although wrongly, the letter of credit, Golden West did noth-
ing to ensure that CENCO followed the mandate of the Supe-
rior Court. SunTrust argues that Golden West thereby waived
any right to recover under the letter of credit.
GOLDEN WEST REFINING v. SUNTRUST BANK 10937
[9] SunTrust’s argument ignores the distinct nature of the
three relationships formed under a letter of credit.5 The judg-
ment of the Superior Court affected only the relationship
between Golden West and CENCO, and the failure of Golden
West to take action to enforce the October 2001 order would
affect only any right Golden West had to enforce that order
against CENCO. As the district judge properly concluded,
under the UCC, SunTrust could not cancel the letter of credit
and end its relationship with Golden West based on an order
from the Superior Court; the litigation in the Superior Court
did not involve SunTrust or give SunTrust any right to cancel
the letter of credit. “After a letter of credit is issued, rights and
obligations of a beneficiary, applicant, confirmer, and issuer
are not affected by an amendment or cancellation to which
that person has not consented except to the extent the letter of
credit provides that it is revocable or that the issuer may
amend or cancel the letter of credit without that consent.”
UCC § 5-106(b). Under UCC § 5-108(a), an issuer can honor
a presentation only if it “appears on its face strictly to comply
with the terms and conditions of the letter of credit.” Id. The
letter of credit expressly provided that SunTrust could termi-
nate the letter of credit only upon receipt of “a notarized writ-
ten agreement signed by a vice president of Golden West
Refining Company and a vice president of CENCO authoriz-
ing such reduction or termination.” Under UCC §§ 5-106(b)
and 5-108(a), therefore, no order from the Superior Court of
California could permit SunTrust to validly cancel the letter
5
“A letter of credit transaction involves at least three parties and three
separate and independent relationships: (1) the relationship between the
issuer and the beneficiary created by the letter of credit; (2) the relation-
ship between the customer and the beneficiary created by a contract or
promissory note, with the letter of credit securing the customer’s obliga-
tions to the beneficiary under the contract or note; and (3) the relationship
between the customer and the issuer created by a separate contract under
which the issuer agrees to issue the letter of credit for a fee and the cus-
tomer agrees to reimburse the issuer for any amounts paid out under the
letter of credit.” W. Sec. Bank v. Superior Court, 15 Cal. 4th 232, 239 n.3
(1997).
10938 GOLDEN WEST REFINING v. SUNTRUST BANK
of credit. And, SunTrust was under no obligation to cancel the
letter of credit because it was not a party to the state court
action. See, e.g., Fazzi v. Peters, 68 Cal. 2d 590, 594 (1968)
(“[A] judgment may not be entered either for or against one
not a party to an action or proceeding.”); O’Hara v. Pittston
Co., 186 Va. 325, 346 (1947) (“ ‘[G]enerally one not a party
to an action is not bound by the judgment therein merely
because he knew of the pendency of the action . . . .’ ” (quot-
ing 1 FREEMAN ON JUDGMENTS, § 410 (5th ed. 1925)). There-
fore, SunTrust’s purported cancellation of the letter of credit
had no legal effect. We thus affirm the district court’s rejec-
tion of SunTrust’s waiver argument and hold that the letter of
credit was in existence and valid when Golden West made an
unencumbered draw on the letter of credit on February 2,
2005.
V
Finally, SunTrust contends that it is entitled to summary
judgment on Golden West’s claims for specific performance
and breach of contract. Both parties have stipulated that the
issue of consequential damages on the breach of contract
claim is moot. Because we affirm the district court’s order
granting summary judgment to Golden West as to its claim of
wrongful dishonor and because the remedies awarded by the
district court on Golden West’s breach of contract and spe-
cific performance claims are entirely duplicative of those
awarded under the wrongful dishonor claim, except for the
now moot issue of consequential damages, we need not and
do not reach SunTrust’s appeal of the breach of contract and
specific performance claims. Whether breach of contract and
specific performance theories can support relief beyond that
flowing from UCC § 5-111 in the case of a wrongfully dis-
honored letter of credit can be considered in a case where it
makes a difference.
VI
In conclusion, we hold that the letter of credit here is not
a perpetual letter of credit under UCC § 5-106(d), that Sun-
GOLDEN WEST REFINING v. SUNTRUST BANK 10939
Trust did not waive its right to assert the affirmative defense
of waiver to Golden West’s wrongful dishonor claim, and that
Golden West did not waive its right to seek a remedy for Sun-
Trust’s wrongful dishonor of the letter of credit by failing to
take action to enforce the Superior Court’s order requiring
CENCO to reinstate the letter of credit. The letter of credit
was in existence when Golden West made a valid draw on it
on February 2, 2005, and SunTrust must honor the draw.
AFFIRMED.