Opinion ID: 2626065
Heading Depth: 1
Heading Rank: 6

Heading: Alleged Breach by FFI

Text: [¶ 24] M & M claims it was excused from performing under the agreement because FFI breached the agreement when it failed to perform its collection activities in good faith. M & M's vice president, Keith Smith, testified as follows: I did pay, trying to fulfill the obligation  although I felt the obligation was not due and just  set out to try to make good on it. And more information came in as we went as to the ineffective and inability for [FFI] to collect the notes. My understanding was that they needed to collect all monies due, and they didn't. They gave up routinely and often, and did not fulfill their end of the contract. So I put a halt to everything at that point. This testimony suggests that M & M stopped paying because FFI failed to collect the amounts due from M & M's customers, as if collection had to occur before the full recourse provision was triggered. Collection of the amounts due clearly was not a prerequisite to FFI seeking payment from M & M. Rather, the agreement unambiguously provided that FFI was entitled to full recourse from M & M in cases where its collection activities proved unsuccessful. [¶ 25] M & M also asserts that it was excused from payment of the uncollected amounts because FFI did not perform its collection efforts in good faith but did so half-heartedly, essentially making only a couple of telephone calls to delinquent customers and then seeking full recourse. In support of this assertion, M & M points to evidence that FFI did not involve a collection agency or a lawyer in its collection efforts and did not make efforts to repossess any of the vehicles. [¶ 26] In Scherer Constr., LLC v. Hedquist Constr., Inc., 2001 WY 23, ¶ 24, 18 P.3d 645, 655 (Wyo.2001), we held that parties to a commercial contract may bring a claim for breach of the implied covenant of good faith and fair dealing based upon a contract theory. Given the agreement between M & M and FFI, it follows that a covenant of good faith and fair dealing is implied in the contract. The implied covenant of good faith and fair dealing: [R]equires that a party's actions be consistent with the agreed common purpose and justified expectations of the other party. ... The purpose, intentions and expectations of the parties should be determined by considering the contract language and the course of dealings between and conduct of the parties. The covenant of good faith and fair dealing may not, however, be construed to establish new, independent rights or duties not agreed upon by the parties. In other words, the concept of good faith and fair dealing is not a limitless one. The implied obligation must arise from the language used or it must be indispensable to effectuate the intention of the parties. In the absence of evidence of self-dealing or breach of community standards of decency, fairness and reasonableness, the exercise of contractual rights alone will not be considered a breach of the covenant. Whitlock Constr., Inc. v. South Big Horn County Water Supply Joint Powers Bd., 2002 WY 36, ¶ 24, 41 P.3d 1261, 1267 (Wyo. 2002) (citation omitted). Although many claims for breach of good faith involve questions of fact making summary judgment inappropriate, summary judgment may be appropriate where, under the facts in the record, the party's actions were in conformity with the clear language of the contract. Id. [¶ 27] Applying these standards, we conclude there is no genuine issue of material fact on M & M's breach of the implied covenant defense. The contract language provided that FFI was responsible for collection activities, including telephone collections and dunning when appropriate. The contract language did not state that FFI was required to make repeated telephone calls for several weeks, hire a collection agency or a lawyer, file a small claims action or repossess the vehicles. There is no evidence in the record that at the time they entered into the agreement either party intended that FFI was required to engage in those activities. Had the parties intended to impose those duties on FFI, they were free to expressly state that intention in the contract itself. Particularly where, as here, the parties' business relationship spanned several years and both parties were experienced in the used car financing business, we are not willing to infer that such duties existed absent clear language in the contract or evidence indicating that was the parties' intent at the time the agreement was executed.