Opinion ID: 885270
Heading Depth: 1
Heading Rank: 8

Heading: Breach of Covenant of Good Faith

Text: ¶ 44 The Plaintiffs contend that the District Court erred when it dismissed their claim for breach of the implied covenant of good faith and fair dealing. The Plaintiffs argue that, based on this Court's holding in Durbin, no expert testimony is required to establish reasonable commercial standards in order to sustain a claim for breach of the covenant of good faith and fair dealing. ¶ 45 The District Court concluded that reasonable commercial standards are not within the common knowledge of a lay person, and that as a result, expert testimony is mandated. The District Court further concluded that because the Plaintiffs failed to produce any evidence to suggest that the Defendants breached the covenant of good faith and fair dealing, the Defendants' motion for summary judgment should be granted. ¶ 46 In Durbin, the Durbins argued that a layperson could determine whether a broker had violated the regulations set forth in the Montana Real Estate Licensing Act because the determination required no special knowledge since the specific standards of conduct were set forth in the statute. Accordingly, in Durbin we held the following: [T]he provisions of the Real Estate Licensing Act establish a standard of conduct to which brokers and salespersons must conform. If not, they must bear the consequences. Accordingly, in the instant case, expert testimony was not required because a jury may determine whether the Realtors violated any of the provisions in the regulations or statutes. Durbin, 276 Mont. at 476, 916 P.2d at 766. ¶ 47 The implied covenant of good faith and fair dealing is set forth in § 28-1-211, MCA, and provides that [t]he conduct required by the implied covenant of good faith and fair dealing is honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. ¶ 48 In Crenshaw v. Bozeman Deaconess Hospital, 213 Mont. 488, 693 P.2d 487 (1984), we held that expert testimony on the issue of reasonable commercial standards, as contemplated by the implied covenant of good faith and fair dealing, was proper. The rationale for our holding in Crenshaw was as follows: Fault arising from breach of implied covenant of good faith and fair dealing is not easily comprehensible to the average person. [The expert's] testimony was based on professional expertise and experience which the individual jury members were unlikely to possess. Her testimony assisted the trier of fact by providing the jury with information and a prospective [sic] beyond the common experience of a lay juror. Crenshaw, 213 Mont. at 502, 693 P.2d at 494. ¶ 49 However, if the duty requires both honesty and commercially reasonable conduct, then it follows that the duty can be breached by either dishonesty or commercially unreasonable conduct. There is no requirement that both be proven. Furthermore, as we held in Durbin, it does not require expert testimony to prove dishonesty, and it follows that if there is sufficient evidence to submit the issue of fraud to a finder of fact, there is sufficient evidence of dishonesty to submit the issue of bad faith to the finder of fact. ¶ 50 Therefore, we conclude that the District Court erred when it dismissed Plaintiffs' claims for breach of the covenant of good faith and fair dealing by summary judgment.