Opinion ID: 220052
Heading Depth: 3
Heading Rank: 2

Heading: sufficiency of the evidence

Text: The duty of good faith and fair dealing requires parties to a contract to conduct themselves fairly and responsibly. See, e.g., Winfree v. Educators Credit Union, 900 S.W.2d 285, 289 (Tenn.Ct.App. 1995) ([T]here is an implied undertaking in every contract on the part of each party that he will not intentionally or purposely do anything . . . which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. (internal quotation marks and citation omitted)); Williams v. Maremont Corp., 776 S.W.2d 78, 81 (Tenn.Ct.App. 1988) (All parties are bound by law to act in word and deed, in a responsible manner. . . . (internal quotation marks omitted)). Parties have a duty of good faith and fair dealing not only in executing the transaction ultimately contemplated by the contract, but also in fulfilling the preconditions and contingencies set forth in the contract. See Covington v. Robinson, 723 S.W.2d 643, 646 (Tenn.Ct.App.1986) (finding that duty of good faith and fair dealing required purchasers in real estate contract to work in good faith to obtain financing). Because the nature of the duty of good faith and fair dealing depends on the contract at issue, courts look to the language of the instrument and to the intention of the parties, and impose a construction which is fair and reasonable. TSC Indus., Inc. v. Tomlin, 743 S.W.2d 169, 173 (Tenn.Ct.App.1987). At trial, Hometown presented evidence that S & B Wilson failed to meet a number of its pre-closing requirements under the Agreement. For example, Hometown presented evidence that S & B Wilson delayed giving Hometown access to certain properties to perform due diligence as required by the Agreement. In addition, Hometown presented evidence that S & B Wilson failed to meet its deadline to deliver financial documents to Hometown within twenty days after the end of an accounting period. Thus, Hometown presented evidence that S & B Wilson breached its duty of good faith and fair dealing by blocking due diligence and failing to deliver required financial information. Hometown also presented evidence at trial showing that S & B Wilson hindered its attempts to close the transaction contemplated by the Agreement. Tennessee courts have found that [e]ach party to the contract [is] under an implied obligation to restrain from doing any act that would delay or prevent the other party's performance of the contract. . . . Each party [has] the right to proceed free of hinderance by the other party. ACG, Inc. v. Se. Elevator, Inc., 912 S.W.2d 163, 168 (Tenn.Ct.App.1995). Passive non-cooperation, as well as active non-cooperation, may constitute breach of the duty of good faith and fair dealing. See German v. Ford, 300 S.W.3d 692, 707 (Tenn.Ct.App. 2009). Hometown presented evidence that S & B Wilson was slow to respond, if it responded at all, to Hometown's attempts to find a solution to the environmental issues. Hometown also introduced evidence that in March 2006, S & B Wilson deliberately stalled the transaction in an attempt to invoke a termination provision. Thus, under our extremely deferential standard of review, Hometown presented evidence at trial that S & B Wilson breached the duty of good faith and fair dealing by hindering Hometown's attempts to close the transaction. Furthermore, the district court was correct to hold that a reasonable jury could have found that Hometown was willing to close on the Agreement as it was written. S & B Wilson points to some evidence that indicates that Hometown was hesitant to close the transaction before the environmental issues were resolved. For example, it points to testimony from Gordon and Elliott Davenport that Hometown was unwilling to close without some adjustments based on environmental concerns, and to several proposals by Hometown to renegotiate the terms of the Agreement. However, Gordon and Elliott Davenport also testified that Hometown was ready to move forward with a closing. When taking the strongest legitimate view of the evidence in favor of Hometown, there was evidence from which a reasonable jury could conclude that Hometown was willing to close the transaction regardless of the environmental issues. There is sufficient evidence to support the jury's finding that S & B Wilson's actions leading up to the termination of the Agreement or its course of conduct in carrying out the terms of the Agreement breached its duty of good faith and fair dealing. Thus, we AFFIRM the district court's denial of S & B Wilson's motion for judgment as a matter of law as to the breach of the duty of good faith and fair dealing.