25-1781
1st Cir.Jul 17, 2026Background
- RITC and Daimler’s Dealer Agreement gave RITC a nonexclusive Freightliner dealership in a defined area of responsibility and allowed Daimler, in its sole discretion, to appoint additional dealers when warranted. 1
- In 2021, Daimler appointed ATG Raynham as a new Freightliner dealer in Bristol County, within RITC’s area. 2
- Daimler’s business manager testified that warranting a new dealer depended on customer-support needs, dealer performance, service demand, and field input, and he cited RITC’s poor performance as a major factor. 3
- Internal Daimler materials showed a broader Northeast consolidation strategy, including plans to use ATG as an anchor dealer and potentially divest underperforming dealers like RITC. 4
- After Daimler rejected RITC’s request to relocate, ATGR later opened a full-service Freightliner dealer in Bristol County following RITC’s expansion investments. 5
- RITC sued for breach of contract and breach of the implied covenant of good faith and fair dealing, and the district court granted summary judgment to Daimler on both claims. 6
- The First Circuit reviewed summary judgment de novo and affirmed. 7
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Daimler breach the Dealer Agreement by appointing ATGR? 8 | RITC said “warranted” required a territory-based market justification. | Daimler said the contract allowed appointment for any business reason tied to its objectives. | No; Daimler had a contractually proper reason and no breach occurred. 9 |
| Did Daimler breach the implied covenant of good faith and fair dealing? 10 | RITC said Daimler used discretion as a pretext to eliminate it and misled it about ATGR. | Daimler said its conduct fit the contract and the covenant adds no extra duties. | No; the covenant was not violated on either theory. 11 |
Key Cases Cited
- Pleasantdale Condos., LLC v. Wakefield, 37 F.4th 728 (1st Cir. 2022) (summary judgment facts are viewed in the light most favorable to the nonmovant 12)
- Williams v. Kawasaki Motors Corp., U.S.A., 30 F.4th 66 (1st Cir. 2022) (courts do not weigh credibility or resolve testimonial conflicts at summary judgment 13)
- Clean Harbors Env't Servs., Inc. v. 96-108 Pine St. LLC, 286 A.3d 838 (R.I. 2023) (contracts are interpreted by their plain and ordinary meaning 14)
- Northern Insurance Co. of New York v. Point Judith Marina, LLC, 579 F.3d 61 (1st Cir. 2009) (unambiguous contract language controls and context informs interpretation 15)
- Petrolex II LLC v. Bailey Group, LLC, 290 A.3d 1288 (R.I. 2023) (contract words should be given effect and surplusage avoided 16)
- Dovenmuehle Mortgage, Inc. v. Antonelli, 790 A.2d 1113 (R.I. 2002) (Rhode Island recognizes an implied covenant of good faith and fair dealing in virtually every contract 17)
- Premier Home Restoration, LLC v. Federal National Mortgage Ass'n, 245 A.3d 745 (R.I. 2021) (the covenant protects contractual aims and the parties’ right to the contract’s fruits 18)
- Papudesu v. Medical Malpractice Joint Underwriting Ass'n of Rhode Island, 18 A.3d 495 (R.I. 2011) (good faith applies even when a contract grants broad discretion 19)
- EDC Inv., LLC v. UTGR, Inc., 275 A.3d 537 (R.I. 2022) (the implied covenant is not an independent cause of action 20)
- Saccucci Auto Group, Inc. v. American Honda Motor Co., 617 F.3d 14 (1st Cir. 2010) (a discretionary business decision consistent with fair dealing does not violate the covenant 21)
- Doe v. Brown University, 943 F.3d 61 (1st Cir. 2019) (arbitrary or bad-faith conduct violates the implied covenant 22)
- Miller v. Wells Fargo Bank, N.A., 160 A.3d 975 (R.I. 2017) (the covenant cannot create rights and duties not grounded in the contract 23)