Opinion ID: 2516858
Heading Depth: 2
Heading Rank: 4

Heading: guardian title's implied covenant of good faith and fair dealing claim

Text: ¶ 19 Having determined that Guardian Title's contractual causes of action should not be treated as tort claims and that none of the tort defenses asserted by Tebbs apply to contract actions, we next consider whether the district court correctly rejected Guardian Title's breach of an implied covenant of good faith and fair dealing claim on the ground that no term in the contract at issue declared that Tebbs would refrain from paying individuals outside of Guardian Title's payroll. Tebbs argues that we should affirm the district court's conclusion because Brehany v. Nordstrom, 812 P.2d 49, 55 (Utah 1991), states that the covenant of good faith and fair dealing cannot be construed . . . to establish new, independent rights or duties not agreed upon by the parties. The case at hand would not require such a construction, however. ¶ 20 Tebbs explicitly covenanted to prepare checks payable to Guardian Title's employees and reconcile its payroll account. Contrary to the narrow meaning the district court apparently gave to these contractual terms, we conclude that the good faith performance of both of these obligations requires that Tebbs refrain from paying individuals other than Guardian Title's employees. Indeed, by agreeing to such terms, Tebbs effectively agreed to ensure that no unauthorized payroll payments were made. It did so because the word reconcile means to check a financial account against another for accuracy, Webster's Collegiate Dictionary 977 (10th ed.1998) (internal parentheses omitted), and the obligation to prepare checks payable to Guardian Title's employees implies that no checks will be written to individuals not included in that category. Accordingly, the notion that Tebbs would prevent Mitchell from writing unauthorized checks was an express term in the contract Tebbs had with Guardian Title. The district court therefore erred in holding that Guardian Title's implied covenant of good faith and fair dealing claim depended on the creation of a new contractual term.