DCW Monthly: June 2026
A letter of credit is built on a simple promise: the bank pays on a complying demand, and the underlying
DCW Litigation Digest
Universal Property Services, Inc. v. Lehigh Gas Wholesale Services, Inc.
Case involved LCs containing a condition that Issuing Bank would only honor demands if Applicant first furnished indemnification to Issuing Bank.
Universal Property Services, Inc. v. Lehigh Gas Wholesale Services, Inc.
No. 20-03315 (GC), (TJB) (D.N.J. Jan. 15, 2026) [USA]
Type of Lawsuit: Applicant sued Beneficiary for breach of contract. Beneficiary lodged counterclaims and later moved for summary judgment.
Topics: Breach of Contract; Independence Principle; Indemnification; Setoff
Parties:
• Plaintiff/Franchisee/Applicant – Universal Property Services, Inc.
• Applicant Owner/Guarantor – Syed Kazmi
• Defendant/Franchisor/Beneficiary – Lehigh Gas Wholesale Services, Inc.
• Original Beneficiary – Circle K Stores, Inc.
• Issuing Bank – Soleil Chartered Bank
Underlying Transaction: Gas station franchise and fuel supply agreements.
Instrument: Four letters of credit for USD 300,000, USD 25,000, USD 187,500, and USD 2,000,000, and personal guaranties. Silent as to practice rules and governing law.
Decision: The United States District Court for the District of New Jersey, Castner, J., granted Beneficiary's motion for summary judgment in part regarding the Petroleum Marketing Practices Act (PMPA) claim and the lease and guaranty counterclaims, denied the motion in part as moot regarding the fuel supply contract counterclaim, and reserved the determination of damages.
Rationale: Summary judgment granted where lease required rent payment without setoff and Applicant failed to pay rent or provide an acceptable letter of credit, justifying Beneficiary withholding credit card proceeds as security and rendering franchise termination lawful under PMPA despite Applicant's claim that withheld proceeds caused non-payment.
No. 20-03315 (GC), (TJB) (D.N.J. Jan. 15, 2026) [USA]
Type of Lawsuit: Applicant sued Beneficiary for breach of contract. Beneficiary lodged counterclaims and later moved for summary judgment.
Topics: Breach of Contract; Independence Principle; Indemnification; Setoff
Parties:
• Plaintiff/Franchisee/Applicant – Universal Property Services, Inc.
• Applicant Owner/Guarantor – Syed Kazmi
• Defendant/Franchisor/Beneficiary – Lehigh Gas Wholesale Services, Inc.
• Original Beneficiary – Circle K Stores, Inc.
• Issuing Bank – Soleil Chartered Bank
Underlying Transaction: Gas station franchise and fuel supply agreements.
Instrument: Four letters of credit for USD 300,000, USD 25,000, USD 187,500, and USD 2,000,000, and personal guaranties. Silent as to practice rules and governing law.
Decision: The United States District Court for the District of New Jersey, Castner, J., granted Beneficiary's motion for summary judgment in part regarding the Petroleum Marketing Practices Act (PMPA) claim and the lease and guaranty counterclaims, denied the motion in part as moot regarding the fuel supply contract counterclaim, and reserved the determination of damages.
Rationale: Summary judgment granted where lease required rent payment without setoff and Applicant failed to pay rent or provide an acceptable letter of credit, justifying Beneficiary withholding credit card proceeds as security and rendering franchise termination lawful under PMPA despite Applicant's claim that withheld proceeds caused non-payment.
Factual Summary:
Universal Property Services, Inc. (Franchisee/Applicant) executed franchise agreements, comprising leases and fuel supply contracts, with Circle K Stores Inc. (Original Beneficiary) for 17 gas stations. Original Beneficiary subsequently assigned these agreements to Lehigh Gas Wholesale Services, Inc. (Franchisor/Beneficiary). To support payment obligations, Applicant was required to provide LCs and personal guaranties. Syed Kazmi (Applicant Owner/Guarantor) executed the personal guaranties and Soleil Chartered Bank (Issuing Bank) issued four LCs. However, the LCs contained a condition that Issuing Bank would only honor demands if Applicant first furnished indemnification to Issuing Bank.