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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: July 4, 2017

Court Upholds Implied Covenant Claim Based on Frustration of Plaintiff’s Efforts to Recover Funds

On June 22, 2017, the First Department issued a decision in Tillage Commodities Fund, L.P. v. SS&C Tech., Inc., 2017 NY Slip Op. 05155, upholding a claim for breach of the implied covenant of good faith and fair dealing based on a fund administrator’s alleged frustration of the plaintiff’s efforts to recover money of which it was defrauded, explaining:

The breach of the implied covenant claim should be sustained, however, as to defendant’s post-discovery conduct. That conduct, which includes allegedly failing to immediately notify plaintiff of the fraud and filing a misleading report with Hong Kong police, is separate from the misconduct alleged in plaintiff’s breach of contract claim. Defendant’s attempt to dispute the veracity of these allegations is improper at the motion to dismiss stage. Moreover, plaintiff has alleged damages resulting from this frustration of its recovery efforts, including a dramatically reduced likelihood of recovering funds from the latest transfer.

(Internal citations omitted).

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