Miller Automobile Corp. v. Jaguar Land Rover North America LLC
A complaint that alleges breach of the implied covenant of good faith and fair dealing might fail to state a claim, if the complaint fails to allege fraud, misrepresentation or wrongful motive. The plaintiff, Miller Automobile Corp., alleged that the defendant, Jaguar Land Rover, breached a dealership contract, because it unreasonably failed to approve a relocation request. The plaintiff also alleged that the defendant breached the implied covenant of good faith and fair dealing. The District Court found that the plaintiff failed to state a claim for breach of the dealership contract and that the plaintiff failed to adequately allege the defendant acted in bad faith. The plaintiff appealed to the 2nd Circuit. The dealership contract apparently provides that the question of whether a proposed relocation is in the plaintiff's best interests is discretionary and depends on the defendant's "good faith business judgment." The contract provides in pertinent part, "The Company will approve the proposed relocation only if, based upon all the relevant factors, the Company in the exercise of its good faith business judgment considers the proposed relocation to be in the best interests of Dealer and of Jaguar owners in the area in which [the plaintiff] is located." As a result, the plaintiff was required to plead in its complaint that the defendant wrongly failed to exercise its good-faith business judgment, when it considered whether to approve the plaintiff's relocation request. "Shorn of its conclusory assertions," wrote the 2nd Circuit, "the Complaint simply fails to allege facts sufficient to state a plausible claim that [the defendant] did not exercise good faith business judgment in declining to permit the relocation." Ruling on the plaintiff's allegation that the defendant breached the implied covenant of good faith and fair dealing, the 2nd Circuit also found that the plaintiff failed to adequately allege bad faith. Although the plaintiff maintained that the defendant unreasonably required that the plaintiff agree to perform facility upgrades, to obtain approval of the plaintiff's relocation request, the plaintiff failed to allege fraud, misrepresentation or wrongful motive. The 2nd Circuit affirmed the judgment of the District Court, Burns, J.