Court Opinion

ID: 9631394
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:36:41.686812+00
Date Added: 2024-06-11T12:29:16.462466
License: Public Domain

WARREN, P.' J.,
concurring.
In this case, the majority affirms the trial court’s decision but says that the court erred in holding that the contract was one at-will. I concur in the majority’s result, but write separately because I conclude the trial court was correct in holding that the express “good faith” provision in the contract did not alter the nature of the employment contract and did not restrict the reasons or the motives for which either party could terminate the contract.
The majority’s reasoning merits scrutiny because, in effect, it guts the legal proposition that employment contracts are generally at-will, and thus, terminable for any reason without regard to motive. The flaw in the majoritys analysis is that it concludes, without any meaningful reasoning, that the parties’ express recitation of “good faith” adds something more to their contractual duties and obligations than what is already imposed under the implied covenant of good faith. See Wyss v. Inskeep, 73 Or App 661, 668 n 7, 699 P2d 1161, rev den 300 Or 64 (1985). If, as the majority contends, a simple statement of “good faith,” without more, will suffice to change the nature of the contract from one terminable at-will to one terminable only for cause, then it escapes *561me why, when the same covenant is implied, the same result does not follow.
In U.S. National Bank v. Boge, 311 Or 550, 814 P2d 1082 (1991), the Oregon Supreme Court summarized its holdings on good faith:
“The obligation of good faith does not vary the substantive terms of the bargain * * * nor does it provide a remedy for an unpleasantly motivated act that is expressly permitted by contract or statute. As this court noted in the common law context:
“ ‘The law imposes a duty of good faith and fair dealing to facilitate performance and enforcement of the contract where it is consistent with and in furtherance of the agreed-upon terms of the contract or where it effectuates “the reasonable contractual expectations of the parties.” Best v. U.S. National Bank, [303 Or 557, 563, 739 P2d 554 (1987)] * * *.
“ ‘The foundation of the at-will employment agreement is the express or implied understanding that either party may terminate the contract for any reason, even for a bad cause. A duty of good faith and fair dealing is appropriate in matters pertaining to ongoing performance of at-will employment agreements. It is not appropriate to imply the duty if it is inconsistent with a provision of the contract.’ Sheets v. Knight, 308 Or 220, 233, 779 P2d 1000 (1989) * * *.” 311 Or at 567. (Emphasis deleted.)
Here, pursuant to paragraph 11, the contract provided:
“Both parties agree, with respect to this agreement, to engage in good faith and in fair dealing with respect to the other at all times during the term of this agreement.”
That is no more than an expression of what the law already implies. The majority fails to explain why this expression, which is unrelated to any specific provision in the contract, changes the contract from one at-will into one that can only be terminated for good cause and why the fact that the parties wrote it down makes the employment contract any different.1 The majority attempts to explain that it makes a difference because the decision to exercise the contractual right to *562terminate the agreement is a decision that necessarily is made during the “term” of the agreement. That is true but does not help us resolve the question of whether this is an at-will contract or not. A decision to terminate any employment contract is made during the term of the contract. The majority fails to explain, in any satisfactory way, why this contract is not at-will. An express covenant of good faith that adds nothing to the implied obligation of good faith does not change the contract from one at-will.
Additionally, defendant’s argument that plaintiffs unconditional right to terminate the agreement upon notice is restricted by the duty of good faith is inconsistent with an express provision of this contract. 2 A generally stated duty of good faith cannot vary the substantive right of each party to end the contract for any reason, subject only to the giving of notice. 311 Or at 567. As the Supreme Court stated in Sheets, “[t]he foundation of the at-will employment agreement is the express or implied understanding that either party may terminate the contract for any reason, even for a bad cause.” 308 Or at 233.
As set out above, the duty of good faith operates to effectuate the reasonable expectations of the parties as determined under the terms of their contract; it is an objective standard. In the present case, the reasonable contractual expectations of the parties are shown by the unambiguous terms of paragraph 5(d) of the agreement, in which the parties agreed that either party had the unilateral right to terminate the agreement on the condition that 30 days written *563notice is given to the other party. There were nó other restrictions on the right to terminate for any reason. Because plaintiff properly exercised its right to terminate the at-will agreement, the trial court did not err in granting the directed verdict on defendant’s counterclaim. The majority’s discussion of whether plaintiff acted in good faith is unnecessary to a proper resolution of this case.
For those reasons, I concur in the majority’s result but not its reasoning.

 It does not necessarily follow, as the majority seems to imply, that the express good faith provision must act to restrict the parties’ ability to terminate the *562agreement, just because we attempt, in construing a contract, to give effect to every word and phrase.

 Our understanding that this is so is evident from our reference in Lund v. Arbonne International, Inc., 132 Or App 87, 887 P2d 817 (1994), to Estey & Associates, Inc. v. McCulloch Corp., 663 F Supp 167 (D Or 1986), in which the Oregon Federal District Court, in applying Oregon law in the context of a claim for bad faith termination of an at-will contract, stated:
“The claim for bad faith termination fails. Plaintiff cannot point to an Oregon case in which a bad faith termination of an at will contract supports liability. Indeed, to allow such a claim would emasculate the termination at will doctrine, and must be rejected.” 663 F Supp at 171.
Lund, 132 Or App at 92 n 3.