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Note: The Georgia Court of Appeals dismissed an appeal by JFS Properties, Inc. (Applicant) from an order granting summary judgment in favor of Environmental Protection Division (Beneficiary) on Beneficiary’s counterclaim solely against SouthCrest Bank, N.A. (Issuer). Issuer argued that Applicant lacked standing to pursue the appeal. The appellate court agreed, citing Georgia’s adoption of U.S. UCC 5-103(d) (Scope) which provides:

Rights and obligations of an issuer to a beneficiary or a nominated person under a letter of credit are independent of the existence, performance, or nonperformance of a contract or arrangement out of which the letter of credit arises or which underlies it including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary.

In light of the independence principle, the appellate court noted that Applicant could not “intervene” in the relationship between Issuer and Beneficiary, “except as provided by [Georgia’s adoption of] U.S. UCC 5-109 (Forgery and Fraud). The appellate court concluded that “[a]ny assertion by [Applicant] that it is an aggrieved party is foreclosed by our opinion issued in Case No. A18A0028.”

Comment: Despite the appellate court’s reference to its opinion in “Case No. A18A0028”, there is no published text. Furthermore, the appellate court does not mention U.S. UCC 5-110(b)(1) or (2) (Warranties) or 5-117(b) (Subrogation of Issuer, Applicant, And Nominated Person) as grounds by which Applicant could “intervene in the relationship that the letter of credit created between [Beneficiary] and [Issuer].”

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