Opinion ID: 2512331
Heading Depth: 2
Heading Rank: 3

Heading: The Circuit Court Correctly Dismissed Young's Claim For Breach of The Assumed Duty of Good Faith and Fair Dealing.

Text: In Young's third point of error, she asserts that the circuit court erred by dismissing her claim that Allstate breached its assumed duty of good faith and fair dealing. OB at 27-30. Young alleges that she was in a contractual relationship with Allstate based on (1) the pledge promising to make an appropriate offer of compensation, (2) Allstate's claim representative stating that she did not need an attorney because Allstate would provide her quality service on her claim and treat her fairly, and (3) her failure to seek legal assistance because of Allstate's representations. [24] She asserts that, as a result of this contract, Allstate had a duty of good faith and fair dealing towards her. We have explained that every contract contains an implied covenant of good faith and fair dealing that neither party will do anything that will deprive the other of the benefits of the agreement. Best Place, 82 Hawai`i at 123-24, 920 P.2d at 337-38; see also Restatement (Second) Contracts  205 (1979) (Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.). [25] Defendants, however, contend that Allstate did not have a contractual relationship with Young inasmuch as the elements of offer, acceptance, and adequate consideration were not present. Accordingly, they assert that they did not assume a duty of good faith and fair dealing towards her and that the circuit court properly dismissed this claim. Because Young fails to demonstrate that she gave Allstate consideration or that she detrimentally relied on Allstate's promise to settle her claim, we agree that Defendants did not owe to Young a duty of good faith and fair dealing. One of the preconditions to the creation of a contract is consideration. Douglass v. Pflueger Haw., Inc., 110 Hawai`i 520, 534, 135 P.3d 129, 143 (2006). Consideration is defined as a bargained for exchange whereby the promisor receives some benefit or the promisee suffers a detriment. Id. (quoting Shanghai Inv. Co., Inc. v. Alteka Co., 92 Hawai`i 482, 496, 993 P.2d 516, 530 (2000), overruled on other grounds by Blair, 96 Hawai`i 327, 31 P.3d 184). A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise. Restatement (Second) of Contracts  71(2) (1981). The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation. Id.  71(3) (spacing altered); see also Shannon v. Waterhouse, 58 Haw. 4, 6, 563 P.2d 391, 393 (1977). In the present matter, Young asserts that, in return for Allstate's representations in its pledges, [she] agreed to forbear the assistance of counsel for over a year. Young chooses her words carefully. Her argument implies that Allstate agreed to perform pursuant to the representations in its pledge in return for Young's forbearance from counsel. That is not, however, what she alleged in her first amended complaint. There, she asserted that, in her initial telephone conversation with an Allstate representative, the representative said that Allstate would provide quality service on her claim and treat hear fairly and that, because of those promises, she did not need an attorney. Young did not allege that the representative stated that Allstate would provide quality service in return for, in exchange for, or conditioned upon Young's forbearance from counsel. See Hipsky v. Allstate Ins. Co., 304 F.Supp.2d 284, 289 n. 6 (D.Conn.2004) (holding that there was no consideration for the promises in Allstate's quality service pledge, because the pledge did not indicate that its promises were conditioned upon the claimant not retaining counsel); cf. Allen v. Aetna Cas. & Surety Co., 222 Va. 361, 281 S.E.2d 818, 819 (1981) (per curiam) (suggesting that one person's promise to settle another's claim in exchange for the other's promise to forbear from employing counsel and instituting suit was adequate consideration to support a contract). Absent conduct probative of an exchange, there was no consideration. A substitute for consideration is detrimental reliance. See Hipsky, 304 F.Supp.2d at 289. Young maintains that she relied on Allstate's pledge representations to her detriment by forbearing from legal counsel for a year. She does not, however, explain how she was prejudiced by her lack of legal counsel for that period. Nor does she assert that she would have investigated the accident any differently or that her case suffered as a result of the delay. See Leal v. Allstate Ins. Co., 199 Ariz. 250, 17 P.3d 95, 99 (Ct.App.2000) (holding that claimants did not detrimentally rely on upon Allstate's quality service pledge because the claimants did not allege that they gave Allstate documents that otherwise they would not have provided, that their case suffered due to delay in hiring an attorney, or that they would have investigated differently had they not relied on the [pledge]). Consequently, we do not believe that Young sufficiently alleged that she detrimentally relied upon the pledge. In the absence of either detrimental reliance or consideration, it follows that there was no contract between Young and Allstate. See Douglass, 110 Hawai`i at 534, 135 P.3d at 143; Hipsky, 304 F.Supp.2d at 289. Absent a contract and because Young's claim was premised upon the existence of a contract, her claim for breach of the assumed duty of good faith and fair dealing must fail. We therefore hold that the circuit court correctly dismissed Young's claim of assumed duty of good faith and fair dealing.