Opinion ID: 2596761
Heading Depth: 3
Heading Rank: 3

Heading: The district court properly granted summary judgment against LP and LPI's counterclaim for breach of the covenant of good faith and fair dealing.

Text: In addition, LP and LPI argue that the district court erred in granting partial summary judgment against their counterclaim for breach of the implied covenant of good faith and fair dealing. They assert that the Golds breached the covenant by conducting inaccurate inventory and accounting methods, which resulted in Vreeken paying an overvalued amount for the Golds' portion of LP and LPI under the MOU. The district court determined that even if the Golds engaged in inaccurate inventory and accounting practices, this conduct occurred prior to the execution of the MOU and, therefore, was not subject to the implied covenant of good faith and fair dealing. Under Massachusetts law, every contract is subject to an implied covenant of good faith and fair dealing. Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 583 N.E.2d 806, 821 (1991). This means that neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.... Id. at 820 (quoting Druker v. Roland Wm. Jutras Assocs., 370 Mass. 383, 348 N.E.2d 763, 765 (1976)). Because the MOU is governed by Massachusetts law, the parties are subject to the implied covenant of good faith and fair dealing. We find the district court properly granted summary judgment against LP and LPI on their counterclaim for breach of the implied covenant of good faith and fair dealing. Until the parties signed the MOU, their rights were not established under the agreement. Thus, any alleged misconduct that occurred prior to the execution of the MOU was not subject to the implied covenant of good faith and fair dealing, as it would not have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. Id. This includes the Golds' allegedly inaccurate inventory and accounting methods. Therefore, we affirm the district court's award of partial summary judgment against LP and LPI on their counterclaim.