Absent a Special
Relationship, Good Faith and Fair Dealing is Not a Standalone Claim
I was recently rereading the
decision rendered in Hackney v Vascular
Solutions, Inc., Civ. Act. No. 3:12-CV-00170-CRS, 2018 WL 2970767 (W.D. Ky
June 13, 2018), and thought it worth a note.
This dispute arose out of the
construction of an employment agreement. In connection therewith, Hackney
bought claims including one arising in tort for breach of the implied covenant
of good faith and fair dealing. This decision addressed Vascular Solutions’
claim for summary judgment as to that allegation, which was premised on the
position that Kentucky does not recognize a claim for tortious violation of the
implied covenant of good faith and fair dealing. Previously, the trial court
had granted, and there had been affirmed by the 6th Circuit, summary
judgment against Hackney's claim for violation of the contractual obligation of
good faith and fair dealing.
After noting that the
obligation of good faith and fair dealing exists in every contract, the court
wrote:
Breach of
this covenant can also serve as the basis of a tort claim, but only where the
contract at issue was entered into by parties with some ‘special relationship’ “not
found in ordinary commercial settings.” To date, “Kentucky courts have only
recognized the existence of such a relationship in the context of insurance
contracts.” Other circumstances which may give rise to a ‘special relationship’
include where the parties bargaining power is unequal or there is some
relationship of trust between them, where one party is particularly vulnerable,
where the parties have nonprofit motivations for contracting. 2018 WL 2970767, *2
(citations omitted).
Finding that this what is an
employment contract, not an insurance contract, dispute, the court held that
there was no special relationship that would give rise to a claim in tort for breach
of the implied covenant and good faith and fair dealing.
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