Western Prop. Holdings v. Aequitas Capital Management

The duty of good faith cannot “be construed in a way that changes or inserts terms into a contract. Instead, [t]he law imposes a duty of good faith and fair dealing in contracts to facilitate performance and enforcement in a manner that is consistent with the terms of the contract.” Safeco Ins. Co. v. Masood, 264 Or App 173, 178 (2014).

Plaintiff appealed the trial court’s judgment granting summary judgment to Defendant. In this contract dispute, Plaintiff argued that Defendant should be held liable for blocking a sale to a third party the parties had a contract for based on Defendant’s breach of the duty of good faith and fair dealing. Plaintiff argued that Defendant breached the duty of good faith by foreclosing on patents to be sold instead of facilitating their sale. Defendant argued that it did not breach the duty of good faith because the contract expressly permitted Defendant to foreclose on the patents. The duty of good faith cannot “be construed in a way that changes or inserts terms into a contract. Instead, [t]he law imposes a duty of good faith and fair dealing in contracts to facilitate performance and enforcement in a manner that is consistent with the terms of the contract.” Safeco Ins. Co. v. Masood, 264 Or App 173, 178 (2014). The Court held that the contract expressly permitted Defendant to decide if foreclosure was necessary, and the duty of good faith could not require the opposite. Affirmed.