First there was real property, and then there was a lease . . . .
In this commercial real property case the owner of a large commercial building offered the building for lease through its realtor. The Plaintiff was interested in leasing a portion of the building and signed a lease. The building would be remodeled to meet the Plaintiff's store layout specifications and the lease required the Defendant to provide as-built drawings and final construction plans within 180 days of signing the lease. The Plaintiff was required to submit plans for construction and signage permits to the City within 90 days of the effective date of the lease. The remodeled property was to be delivered to the Plaintiff no later than January 1, 2019.
After the lease was signed conduct of the parties . . .
Two months after the lease was signed (April) and five months after the as-built drawings were delivered the architect for the project contacted the store's manager to see if there was any progress on the tenant specifications so that final construction plans could be made. The store manager did not respond. Ten days later the architect contacted the manager again and the manager responded: "We won't work on this location for a couple of months yet".
In June the realtor emailed the manager asking for when tenant specifications could be received. The manager did not respond. More email exchanges occurred and most were not addressed or responded to at all and this continued into August with the questions and requirements never fully addressed. Plans for permits were not provided within the terms of the lease time requirement.
And the court said:
Wyoming has adopted the Restatement (Second) of Contracts which states that every contract imposes upon each party a duty of good faith and fair dealing in its performance and in its enforcement. The implied covenant of good faith and fair dealing is a claim separate and distinct from a breach of contract claim and the two claims are not mutually dependent. That means a party may breach the implied covenant of good faith and fair dealing even if it did not breach the express terms of the contract.
The court awarded the Plaintiff damages based on the defendants breach of the lease and the implied covenant.
The court opined:
"The implied covenant of good faith and fair dealing requires that neither party commit an act that would injure the rights of the other party to receive the benefit of their agreement. Compliance with the obligation to perform a contract in good faith requires that a party's actions be consistent with the agree common purpose and justified expectations of the other party. A breach of the covenant of good faith and fair dealing occurs when a party interferes or fails to cooperate in the other party's performance. The purpose, intentions and expectations of the parties should be determined by considering the contract language and the course of dealings between and the conduct of the parties".
And the court described breaches of the implied covenant in the performance of a contract:
"Subterfuges and evasions violate the obligation of good faith in performance even though the actor believes his conduct to be justified. But the obligation goes further: bad faith may be over or may consist of inaction and fair dealing may require more than honesty. A complete catalogue of types of bad faith is impossible but the following types are among those which have been recognized in judicial decisions: an evasion of the spirit of the bargain; lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms and interference with or failure to cooperate in the other party's performance".
In other words, when you make a contract you must cooperate.
If you would like a consultation about whether you or someone you are contracting with is in compliance or breach, please contact me at 307.200.1914 or via my website at www.gaylakaustin.com. Thank you.