Commercial Division Blog

Posted: April 19, 2021 / Categories Commercial, Court Rules/Procedures

Good Faith and Fair Dealing Claim Rejected Because It Was Not Raised Until Summary Judgment

On April 13, 2021, the First Department issued a decision in Darabont v. AMC Network Entertainment LLC, 2021 NY Slip Op. 02240, rejecting a good faith and fair dealing claim because it was not raised until summary judgment, explaining:

Plaintiffs' claim that AMC breached the implied covenant of good faith and fair dealing by crafting the formula for MAGR arbitrarily, irrationally, or in bad faith was improperly asserted for the first time in opposition to defendants' motion for summary judgment. While the cause of action incorporates all preceding allegations by reference, there are no allegations in the complaint that AMC engaged in misconduct by formulating the MAGR definition in such a manner as to deprive plaintiffs of contractual benefits. In addition, it would be prejudicial to require AMC to defend against a theory of liability asserted only after discovery had concluded.

(Internal citations omitted).

The results in a complex commercial litigation often turn on the facts more than the law (which is why it is complex). The rule that an opponent has to be on notice of a party's legal and factual theories, discussed above, is one tool the courts use to force people to keep their stories straight. If you or a client have questions regarding a party changing its factual or legal arguments in the midst of a litigation, contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com.

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