"[T]he duty of good faith and fair dealing between the parties to a contract is well recognized" under New York law. See Mark Patterson, Inc. v. Bowie, 237 A.D.2d 184, 186 (1st Dep't 1997) (citing New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318 (1995) ("implicit in every contract is a covenant of good faith and fair dealing")). The covenant requires that neither contracting party engage in conduct that will have the effect of destroying or injuring the rights of the other party to receive the benefit of the contract.
Again, defendant does not deny that a general duty of good faith is implied in all contracts, but contends that it did not violate this duty, primarily because nothing in the parties' contract prohibited defendant from assigning its rights under the contract to a third party. "[T]he duty of good faith and fair dealing between the parties to a contract is well recognized" under New York law. Mark Patterson, Inc. v. Bowie, 237 A.D.2d 184, 186, 654 N.Y.S.2d 769 (1st Dep't 1997) (citing New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318, 639 N.Y.S.2d 283, 662 N.E.2d 763 (1995) ("implicit in every contract is a covenant of good faith and fair dealing")). This common-law principle is also codified by the U.C.C. See U.C.C. § 1-203 ("Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement").
"[T]he duty of good faith and fair dealing between the parties to a contract is well recognized" under New York law. Sauer v. Xerox Corp., 95 F. Supp. 2d 125, 131 (W.D.N.Y. 2000) (citing Mark Patterson, Inc. v. Bowie, 237 A.D.2d 184, 186, 654 N.Y.S.2d 769 (1st Dep't 1997) (citing New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318, 639 N.Y.S.2d 283, 662 N.E.2d 763 (1995) ("[I]mplicit in every contract is a covenant of good faith and fair dealing")). New York law does not recognize a separate cause of action for breach of the implied covenant of good faith and fair dealing, however, when a breach of contract claim, based upon the same facts, is also pled.
This "affirmative duty to act in order to prevent the denial of the other party's rights under the agreement . . . is commonly found in insurance cases." Id. (citing Weber v. State Farm Mut. Auto. Ins. Co., 873 F. Supp. 201, 208 (S.D. Iowa 1994) ("duty to disclose coverage"); Sears Mortg. Corp. v. Rose, 634 A.2d 74, 86 (N.J. 1993) ("obligation to disclose unprotected risks"); Patterson v. Bowie, 237 A.D.2d 184 (N.Y. App. Div. 1997) ("claim premised on duty to disclose information that might cause a prospective insured to forego insurance by keeping clear of the risk properly dismissed as repetitive of cause of action for breach of covenant"); Miller v. Keystone Ins. Co., 586 A.2d 936, 941 (Pa. Super. Ct. 1991) ("duty to inform of potential for adversarial relationship if insurer knows insured is relying on its advice and counsel"), rev'd on other grounds by 636 A.2d 1109 (Pa. 1994)). Defendant Sentry again argues that Plaintiffs cannot show a violation of the covenant without showing that the subclass members had valid claims for benefits.
Such an aspect of the covenant of good faith and fair dealing is commonly found in insurance cases. See Weber v. State Farm Mut. Auto. Ins. Co., 873 F. Supp. 201, 208 (S.D. Iowa 1994)(duty to disclose coverage); Sears Mortgage Corp. v. Rose, 134 N.J. 326, 634 A.2d 74, 86 (1993)(obligation to disclose unprotected risks); Mark Patterson v. Bowie, 237 A.D.2d 184, 654 N.Y.S.2d 769, 771 (1997)(claim premised on duty to disclose information that might cause a prospective insured to forego insurance by keeping clear of the risk properly dismissed as repetitive of cause of action for breach of covenant); Miller v. Keystone Ins. Co., 402 Pa.Super. 213, 586 A.2d 936, 941 (1991)(duty to inform of potential for adversarial relationship if insurer knows insured is relying on its advice and counsel), reversed on other grounds by 535 Pa. 531, 636 A.2d 1109 (1994)).Allsup's Convenience Stores, Inc. v. The North River Ins. Co., 1999-NMSC-006, ¶ 35, 976 P.2d at 14.
See Cameron v. Cameron, 88 Cal.App.2d 585, 594, 199 P.2d 443 (1948) ("If [one] becomes aware of facts that tend to arouse his suspicion, or if he has reason to believe that any representations made to him are false or only half true, it is his legal duty to complete his investigation and he has no right to rely on statements of the other contracting party."); Mark Patterson, Inc. v. Bowie, 237 A.D.2d 184, 654 N.Y.S.2d 769 (N.Y. App. Div. 1997) ("reliance is negated by the fact that plaintiff had independent access to this information"). UBS AG contends that given clarity of disclosure required by IRS tax forms, plaintiffs could not have justifiably relied on UBS AG's alleged statements suggesting otherwise.
That said, no obligation can be implied that would be inconsistent with explicit, bargained-for contractual terms. Mark Patterson, Inc. v. Bowie, 237 A.D.2d 184, 654 N.Y.S.2d 769, 771 (1st Dep't 1997); Dalton, 639 N.Y.S.2d at 979-80. In refuting the City's claim, Creative asserts that its "breach of implied covenant of good faith claim is based primarily on New Rochelle's conduct after the bubbler system was discovered, not on New Rochelle's failure to disclose its existence at the outset."
"[T]he duty of good faith and fair dealing between the parties to a contract is well recognized" under New York law. Mark Patterson, Inc. v. Bowie, 237 A.D.2d 184, 186, 654 N.Y.S.2d 769 (1st Dep't 1997) (citing New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 318, 639 N.Y.S.2d 283, 662 N.E.2d 763 (1995) ("implicit in every contract is a covenant of good faith and fair dealing")). There is, however, ample authority that "a breach of that duty will be dismissed as redundant where the conduct allegedly violating the implied covenant is also the predicate for a claim for breach of covenant of an express provision of the underlying contract."
That said, no obligation can be implied that would be inconsistent with explicit, bargained-for contractual terms. Patterson v. Bowie, 237 A.D.2d 184, 654 N.Y.S.2d 769, 771 (1st Dept. 1997); Dalton, 639 N YS.2d at 979-80, 663 N.E.2d at 291-92. Tagare contends that NNS — through the actions of NNS/NNS(B) executives Parry, Reda, Yackanich, and Timpanaro — violated the Agreement's implied covenant of good faith and fair dealing by interfering with his ability to earn the maximum bonus of $1.8 million under Schedule 2, ¶ 16 of the Agreement (the only item of compensation that Tagare did not receive under the Agreement).
See Weber v. State Farm Mut. Auto. Ins. Co., 873 F. Supp. 201. 208 (S.D. Iowa 1994) (duty to disclose coverage); Sears Mortgage Corp. v. Rose, 634 A.2d 74, 86 (N.J. 1993) (obligation to disclose unprotected risks); Mark Patterson v. Bowie, 654 N.Y.S.2d 769, 771 (A.D. 1 Dept. 1997) (claim premised on duty to disclose information that might cause a prospective insured to forego insurance by keeping clear of the risk properly dismissed as repetitive of cause of action for breach of covenant);Miller v. Keystone Ins. Co., 586 A.2d 936, 941 (Pa. Super. 1991) (duty to inform of potential for adversarial relationship if insurer knows insured is relying on its advice and counsel), reversed on other grounds by 636 A.2d 1109 (1994)). {36} In this case, the jury had concluded there was a contract between the parties and that North River had acted in bad faith generally with respect to the supervision of Alexsis' claims handling.