U.S. Court of Appeals for the Second Circuit – Breach of Contract – Implied Warranty of Good Faith – Irrational Payment Calculation
Security Plans v. CUNA Mutual
Judges Sack, Hall and Livingston
Background: The plaintiff appealed from the grant of summary judgment dismissing its claims for breach of contract and violation of the implied covenant of good faith and fair dealing. In making its decision, the district court refused to admit parol evidence to alter the meaning of an unambiguous contractual provision.
Ruling: The Second Circuit affirmed in part and vacated in part. The court held that summary judgment was not warranted on the implied covenant claim without determining whether, in calculating payments owed to the plaintiff, the defendant exercised its discretion arbitrarily or irrationally.
Jerauld E. Brydges of Harter, Secrest & Emery for the plaintiff-appellant; Drew J. Cochrane of Stafford Rosenbaum for the defendant-appellee