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N.K.S. Distributors, Inc. v. Tigani, Cons. C.A. No. 4640-VCP (May 28, 2010) (Parsons, V.C.).

May 28, 2010

In this memorandum opinion, the Court of Chancery granted a motion to dismiss with respect to a claim for breach of the implied contractual covenant of good faith and fair dealing, and reiterated the rule of contract construction that “[i]n all situations where the terms of a contract explicitly address the parties’ dispute, the express terms of a contract and not the implied covenant of good faith and fair dealing will govern the parties’ relations.” (internal quotation and alterations omitted).

Counterclaim plaintiff My Pal, LLC (“My Pal”) claimed, among other things, that defendant Wilmington Trust Company (“WTC”) breached the implied covenant of good faith and fair dealing by exercising rights expressly granted to WTC in connection with a loan to My Pal (the “My Pal Loan”). Specifically, My Pal alleged that WTC breached the covenant by filing a lis pendens, refusing to negotiate in good faith to refinance a mortgage held by My Pal, and by foreclosing on My Pal’s mortgaged properties. In dismissing this claim, the Court noted that “there is nothing in [My Pal’s claim] that indicates WTC has done anything other than act in compliance with the express terms of the My Pal Loan,” and refused to invoke the implied covenant of good faith and fair dealing.

The full opinion is available here