Covenant of Good Faith and Fair Dealing

News & Analysis as of

Orrick's Financial Industry Week in Review

Steps Towards a Capital Markets Union - The European Commission is consulting on a blueprint for creating a harmonized capital market across the EU, to facilitate capital raising in the EU while maintaining consumer and...more

Morgan Stanley Mortgage Capital Holdings LLC Motion to Dismiss RMBS Claims Granted in Part

On April 3, 2015, Judge Laura Swain of the U.S. District Court for the Southern District of New York granted in part and denied in part Morgan Stanley Mortgage Capital Holdings LLC’s (“MSMC”) motion to dismiss breach of...more

The Narrow Contours of the Implied Covenant of Good Faith

Delaware law implies a covenant of good faith and fair dealing into every contract. The Delaware Supreme Court's recent opinion in Nationwide Emerging Managers LLC v. NorthPointe Holdings LLC, No. 441, 2014 (Del. Supr., Mar....more

N.C. Court of Appeals Addresses Common Affirmative Defenses In Commercial Foreclosure Context

A recent opinion from the North Carolina Court of Appeals addresses some common borrower defenses within the context of foreclosure and statute of frauds issues: compromise and settlement, accord and satisfaction, the...more

Ellis v. OTLP GP, LLC, C.A. No. 10495-VCN (Del. Ch. Jan. 30, 2015) (Noble, V.C.)

In this letter opinion, the Court of Chancery denied plaintiffs’ motion to expedite certain contractual claims arising from the sale of a limited partnership after finding that the claims were not colorable. Plaintiffs were...more

Supreme Court Explains Again The Limits Of The Fair Dealing Covenant

This is yet another Supreme Court decision marking the bounds of the covenant of good faith and fair dealing. The covenant is not to be used to modify the terms of a contract, to add terms the parties chose to not include or...more

Fortis Advisors LLC v. Dialog Semiconductor PLC, C.A. No. 9522-CB (Del. Ch. Jan. 30, 2015) (Bouchard, C.)

In this memorandum opinion, the Court of Chancery granted a motion to dismiss certain claims relating to a dispute over earn-out payments owed to the former equity holders of iWatt, Inc. (“iWatt”) following the sale of iWatt...more

Court Of Chancery Limits Implied Covenant Claims

When a contract spells out that its obligations are to be carried out in a “commercially reasonable best efforts” manner, it will be harder to argue there is any gap that the covenant of good faith and fair dealing may fill....more

Delaware Court Examines Implied Covenant of Good Faith Related to Earn-Out

In Fortis Advisors LLC, as the equity representative v. Dialog Semiconductor PLC, the Delaware Court of Chancery examined the implied covenant of good faith in the context of an earn-out provision included in a merger...more

Recent Federal Court Rulings Favor Airlines in Frequent-Flyer Cases

In April 2014, the U.S. Supreme Court held that the Airline Deregulation Act (ADA) preempted a frequent flyer program member's common law claim for breach of the implied covenant of good faith and fair dealing because the...more

Good Faith in Government Contracting: Board of Contract Appeals Adheres to Reasonableness Standard Revived by the Federal Circuit...

Ever since the Federal Circuit’s 2010 decision in Precision Pine & Timber, Inc. v. U.S., the controlling standard for the government’s duty of good faith and fair dealing has been in flux. Prior to Precision Pine, it was...more

AntiCancer, Inc. v. Pfizer, Inc. (Fed. Cir. 2014)

Anyone that has been monitoring the outcome of district court cases recently will be aware of the perils of not including sufficient information, or not timely supplementing, preliminary infringement or invalidity contentions...more

Eastern District of Pennsylvania Finds No “Link” to Bad Faith in Excess Carrier’s Conduct Towards Sausage Company Insured

This month, the Eastern District of Pennsylvania held that excess carrier American Guarantee and Liability Insurance Company (“American Guarantee”) did not engage in bad faith conduct towards insured Maglio Fresh Foods...more

Southern District of New York: It is Unlawful for an Insurer to Withhold Payment When Some Portion on an Insured’s Entitlement is...

Lexington Ins. Co. v. MGA Entm’t, No. 12-cv-3677 (SAS), 2014 WL 3955205 (S.D.N.Y. Aug. 12, 2014). The Southern District of New York denies an insurer’s motion to dismiss an insured’s claim that the insurer breached its...more

Court Grants in Part and Denies in Part DB Structured Products’ Motion to Dismiss Trustee Repurchase Action

On August 28, Justice Marcy S. Friedman of the Supreme Court of the State of New York granted in part and denied in part DB Structured Products, Inc.’s motion to dismiss repurchase claims brought by HSBC, as Trustee for the...more

Ninth Circuit Water Loss Case Provides Guidance on Bad Faith Standard for “Genuine Dispute”

In a recent decision in the case of Pyramid Technologies, Inc. v. Hartford Casualty Ins. Co., 752 F.3d 807 (9th Cir., May 19, 2014), the 9th Circuit, relying on California law, upheld a grant of summary judgment dismissing...more

Bad Faith Claim Against Insurer Ruled Unsustainable by New York Federal Courts Where Based on Same Facts as Breach of Contract...

Two recent New York federal court decisions – 433 Main Street Realty, et al. v. Darwin National Assurance Co., No. 14-cv-587 (NGG) (VMS) (E.D.N.Y. Apr. 22, 2014) and County of Orange v. The Travelers Indemnity Co. No....more

Federal Circuit’s Metcalf Decision a Big Win for Contractors

In a recent decision, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) the supervising court for the Court of Federal Claims and the Boards of Contract Appeals, among others) clarified important legal principles...more

New York Federal Court Dismisses Superstorm Sandy Bad-Faith Claim as Redundant

In 433 Main Street Realty, LLC v. Darwin National Assurance Co., 2014 WL 1622103 (E.D.N.Y. Apr. 22, 2014), the United States District Court for the Eastern District of New York dismissed the insureds’ cause of action against...more

The Supreme Court’s Ginsberg Decision Could Significantly Affect the Outcome of Motor Carrier Preemption Cases

In a unanimous decision, the U.S. Supreme Court recently held that the Airline Deregulation Act (ADA) can preempt even common law claims for breach of the implied covenant of good faith and fair dealing if such claims relate...more

Finally - A Different Result for a Government Contractor's Differing Site Condition Claim

For any government contractor that has had a differing site condition claim denied despite relying on a government geotechnical report about the subsurface conditions of the project site, the U.S. Court of Appeals for the...more

U.S. Supreme Court Unanimously Reverses Ninth Circuit in Northwest, Inc. v. Ginsberg, Holding ADA Preempts State-Imposed Fair...

The U.S. Supreme Court unanimously holds that the Airline Deregulation Act (ADA) preempts a state-law claim for breach of the implied covenant of good faith and fair dealing where it seeks to enlarge the parties' voluntary...more

Recent Governmental decision may benefit contractors on breach of duty of good faith, fair dealing claims.

It is likely that most prime contractors, at one time or another, have felt that their Government customer was not treating them fairly. It is not always clear, however, when conduct that the contractor views as unfair or...more

Who Says Life’s Not Fair: Good Faith and Fair Dealing Prevails in Metcalf Case.

In a ruling highly anticipated among government contractors, the United States Court of Appeals for the Federal Circuit held on February 11, 2014, in Metcalf Construction Company, Inc. v. United States, No. 2013-5041 (Fed....more

The Government's Good Faith and Fair Dealing Duty to Government Contractors - Set-Aside Alert

One of the biggest challenges federal contractors face these days is the time agencies are taking to make decisions that impact the contractors' bottom lines. These delays can be particularly damaging to firms performing...more

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