Court Dismisses Good Faith And Fair Dealing Counterclaim Because Agreement Contained No Exclusivity Provision

Posted: September 9, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Commercial, Breach of Contract, Breach of Implied Covenant of Good Faith, Summary Judgment

Court Dismisses Good Faith And Fair Dealing Counterclaim Because Agreement Contained No Exclusivity Provision

On August 21, 2026, in Anexia, Inc. v. Horizon Data Solutions Ctr., LLC, Index No. 657444/2019, Justice Robert R. Reed granted plaintiff summary judgment dismissing defendant's counterclaim for breach of the implied covenant of good faith and fair dealing.

Under a Master Services Agreement, Anexia provided colocation services to Vazata at a Virginia data center, and the agreement permitted Vazata to contract with third parties, including SAIC, to provide its own services to them at no additional charge. Vazata alleged that Anexia solicited SAIC directly, refused to extend favorable terms that would have allowed Vazata to renew its one-year SAIC agreement, and ultimately contracted with SAIC itself. The court held that the counterclaim failed because the MSA contained no exclusivity provision, and the implied covenant could not be read to supply one. In dismissing the counterclaim, the Court explained:

Nothing in the MSA spoke to "exclusivity," or reserved the right, to Vazata, to provide exclusive services to anyone. While it is arguable that the agreement would reasonably preclude Anexia from contracting for and providing services to Vazata customers during a contract term with a third party, the agreement cannot be read to reasonably extend an exclusivity right to Vazata to contract with those parties after the conclusion of Vazata's third-party agreements unless expressly stated in the language of the contract. . . . Anexia's refusal to renegotiate, submission of a more favorable bid to SAIC, and solicitation of SAIC is conduct that Vazata deems to be unfair, but this court does not find that the conduct violates the "spirit" of the MSA.

The attorneys at Schlam Stone & Dolan LLP frequently litigate disputes concerning breach of contract and breach of the implied duty of good faith and fair dealing. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.

To read more about the limits of the implied covenant of good faith and fair dealing, see Schlam Stone & Dolan's related Commercial Division Blog posts on a decision dismissing an implied covenant claim that sought to advance independent contractual rights not already provided for in the agreement and an earlier decision in this same action holding that an implied covenant claim may proceed independently of a breach of contract claim.