297 A.D.2d 630 | N.Y. App. Div. | 2002
The plaintiff, 1-10 Industry Associates, owns an 85-year-old complex of buildings on the Brooklyn waterfront, known as Industry City. The defendant, Trim Corporation of America (hereinafter Trim), has leased space in Industry City since 1991. In the fall of 1999, when Trim still had approximately three years left on its leases for space in buildings 9 and 10 of the complex, a representative of the plaintiff approached Trim’s president to discuss the possibility of relocating Trim’s operations to a different site. Following several weeks of negotiations, on December 10, 1999, the parties entered into a letter agreement that called for Trim to immediately surrender a portion of its space in building 9 that it used for storage, and relocate that part of its operations to building 10. In exchange for Trim’s agreement to relocate its storage area, the plaintiff
On appeal, the plaintiff contends, inter alia, that its first cause of action states a viable breach of contract cause of action based upon Trim’s alleged violation of the implied covenant of good faith and fair dealing. We agree. Under New York law, a covenant of good faith and fair dealing is implied in all contracts (see Dalton v Educational Testing Serv., 87 NY2d 384, 389; Van Valkenburgh, Nooger & Neville v Hayden Publ. Co., 30 NY2d 34, 45, cert denied 409 US 875; Zuckerwise v Sorceron, Inc., 289 AD2d 114). The implied covenant of good faith encompasses “any promises which a reasonable person in the position of the promisee would be justified in understanding were included” in the agreement, and prohibits either party from doing “anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract” (Dalton v Educational Testing Serv., supra at 389 [internal quotation marks omitted], citing Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62, 69; Kirke La Shelle Co. v Armstrong Co., 263 NY 79, 87). Here, although the letter agreement did not contain a provision requiring Trim to act reasonably in approving or rejecting proposed relocation sites, Trim had an