Opinion ID: 5054
Heading Depth: 2
Heading Rank: 2

Heading: restructuring:

Text: Childers further maintains PSI intentionally breached the Royalty Compensation Agreement when it restructured its business and spun off income to its sales representatives. Childers claims several employees became area representatives. The customers then paid the representatives, instead of PSI, fo r service work. According to Childers, the effect of the reorganization was to reduce the royalties Childers received. Although the deposition testimony of two witnesses raises doubts as to why PSI and Pettengill reorganized the company, Childers' claim nevertheless fails because the Royalty Compensation Agreement does not prohibit restructuring. Moreover, Texas law does not imply a covenant of good faith and fair dealing in every contract. English v. Fischer, 660 S.W.2d 521, 522 (Tex.1983); Crowder v. Tri–C Resources, Inc., 821 S.W.2d 393, 398 (Tex.App.—Houston [1st Dist.] 1991, no writ); Fireman's Fund Ins. Co. v. Murchison, 937 F.2d 204, 208 (5th Cir.1991). Texas law implies such a covenant only when a special relationship exists between the parties such as insurers and insured, principal and agent, joint venturers, and partners. Cockrell v. Republic Mortgage Ins. Co., 817 S.W.2d 106, 116 (Tex.App.—Dallas 1991, no writ); Manufacturers Hanover Trust Co. v. Kingston Investors Corp., 819 S.W.2d 607, 610 (Tex.App.—Houston [1st Dist.] 1991, no writ). The relationship between Childers and PSI and Pettengill does not qualify as a special relationship necessitating an implied covenant of good faith and fair dealing. PSI, therefore, did not breach the Royalty Compensation Agreement, either by its one day delay in payment or by its business restructuring.