Lynch v. Matterport, Inc
24-188
| 9th Cir. | Mar 5, 2025Background
- Shawn Lynch participated in Matterport, Inc.'s Service Partner (MSP) program under a contract that gave Matterport discretion over customer lead referrals.
- The contract expressly stated Matterport made no warranties regarding the generation of leads or increase in business for MSPs.
- Lynch sued Matterport, alleging breach of the implied covenant of good faith and fair dealing, arguing Matterport was obligated to provide leads and not to compete with MSPs.
- The district court granted summary judgment to Matterport and denied Lynch leave to file a third amended complaint, finding any amendment would be futile.
- Lynch appealed both the summary judgment and denial of leave to amend; the appeals court reviewed these rulings de novo and for abuse of discretion, respectively, but reviewed the latter de novo due to futility being the basis for denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of Implied Covenant of Good Faith | Matterport had obligation to provide leads and not compete with MSPs | The contract did not require Matterport to provide leads; such a duty would add to the contract | No breach; duties not in contract |
| Denial of Leave to Amend | Amendments could cure complaint’s defects | Amendment would be futile; no viable claim exists | Denial appropriate; amendment futile |
Key Cases Cited
- Avidity Partners, LLC v. State, 165 Cal. Rptr. 3d 299 (Ct. App. 2013) (implied covenant cannot add substantive duties not reflected in contract terms)
- Guz v. Bechtel Nat’l, Inc., 8 P.3d 1089 (Cal. 2000) (the implied covenant of good faith derives from express contract terms and cannot exist independently)
- Bonin v. Calderon, 59 F.3d 815 (9th Cir. 1995) (futility alone can justify denial of leave to amend)
- Sandoval v. Cnty. of San Diego, 985 F.3d 657 (9th Cir. 2021) (de novo review standard for summary judgment)