Court Opinion

ID: 9797018
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:11:15.834442+00
Date Added: 2024-06-11T08:52:03.219199
License: Public Domain

Judge CRISWELL
specially concurring.
I fully agree with Part III of the majority opinion. I also agree with the majority's conclusion in Part II that the evidence here would not support a finding that ADTs failure to change the amount of the connection fee, that is, its inaction, resulted in a denial of Premier's reasonable expectations.
However, I have serious reservations whether the claim being asserted by Premier with respect to the amount of the connection fee implicates the covenant of good faith and fair dealing, in any case.
I agree, of course, that such a covenant inheres in every contract. I also agree that it may be used to condition a party's exercise of a discretionary authority given by the contract. In my view, however, the covenant is implicated only if the contract does not set forth any other criteria for the exercise of such discretion. It is the covenant's standard of good faith that is used to judge the legitimacy of the exercise of discretion only if there is no other standard established by the contract therefor.
In Amoco Oil Co. v. Ervin, 908 P.2d 498 (Colo.1995), for example, the contract between Amoco and its various dealers allowed Amoco to change the stations' rental rate, but it did not set forth any criteria that it was to use in establishing such a rate. Hence, when Amoco established a rental rate based on several factors, but used duplicating factors in at least one instance, the covenant of good faith and fair dealing was relied upon to invalidate the rental rate, even though nothing in the express contract itself prohibited use of the formula employed by Amoco.
Here, in contrast, both the trial court and we agree that the express terms of this contract required the establishment of a connection fee based upon certain expenses incurred by ADT. Hence, once the trial court found that the amount of the connection fee was not based on these expenses, the conclusion is manifest that ADTs failure to adjust the initial fee was a violation of the express terms of the parties' agreement. Under such an analysis, the covenant of good faith and fair dealing need not be relied upon, and therefore, neither party's "reasonable expectations" become relevant.
Nevertheless, Premier made clear both in the trial court and in counsel's argument before us that it was not relying upon any claimed violation of an express term of the agreement; it emphasized that it was relying solely upon a violation of the covenant. And, for the reasons given by the majority, it failed to prove such a violation.