Lender Liability - 4th Edition - Hardcover
Lender Liability - 4th Edition - Electronic
Breach of Covenant of Good Faith and Fair Dealing - Chapter 13 - Preview Page
§ 13.01 Overview
Few areas in lender liability have undergone a more major
transformation than breach of the covenant of good faith and fair
dealing. From its initial application as a broad doctrine that required
lenders to act in good faith in all their transactions with their borrowers,
the covenant is now considered in some jurisdictions to be little more
than a gap filler in contracts that have terms missing.
Similarly, while bad faith claims used to send shivers up the spines
of lenders because of the threat of punitive and other tort damages, bad
faith claims are now more likely to be pled, and upheld, only as contract
claims. This usually means that the plaintiff obtains little, if anything, in
addition to the recovery allowed for breach of contract. Nevertheless,
breach of the implied covenant continues to be viable in some
circumstances and in some jurisdictions.
§ 13.02 General Principles
It is the law in most, if not all, jurisdictions that all contracts contain
an implied covenant of good faith and fair dealing. This covenant
imposes the duty on both parties to the contract to do everything the
contract presumes they will do to accomplish its purpose. The covenant
also imposes the duty to do nothing that will interfere with the right of
both parties to receive the benefits of the contract. Any conduct that
frustrates a party's ability to obtain the benefits of the contract may
theoretically constitute a breach of the covenant.1
The covenant is generally implied in a contract in one of two ways:
either under the common law,2 which first recognized the covenant on a
wide-scale basis in the insurance context, or under the Uniform
§ 13.01 Overview
§ 13.02 General Principles
§ 13.03 Bad Faith Breach
§ 13.04 Recovery in Contract
§ 13.05 Recovery in Tort
§ 13.06 Duty of Good Faith
§ 13.07 Cases in Which Duty Recognized
§ 13.08 Cases in Which No Duty Found
A. Barry Cappello, Managing Partner, of the Santa Barbara law firm of Cappello & Noël, LLP. Mr. Cappello, who founded the firm in 1977, is recognized as one of the nation's leading trial lawyers and authorities on complex commercial litigation specializing in lender liability. He has represented both large and small businesses against most of the nation's major banks in litigation nationwide. His practice also involves class actions against lenders and other large corporations, bad faith insurance litigation and other complex business and tort litigation matters.
A fierce advocate for his clients, Mr. Cappello has been described by California Lawyer magazine as "Santa Barbara's Resident Barracuda," a reputation Cappello does not dispute. He has successfully tried jury trials with total verdicts in excess of $300 million and negotiated more than $1 billion in settlements and workouts for his clients.
Mr. Cappello has contributed numerous articles on complex business litigation, lender liability andadvanced trial techniques to business, legal, accounting and trade publications. Publications include Trial, The Daily Journal, The National Law Journal, Small Business Advisor and The Commercial Real Estate Journal. Mr. Cappello speaks to legal and business audiences around the country.
Before entering private practice, Mr. Cappello served a seven-year tenure as City Attorney of Santa Barbara. He was the chief litigator against the oil companies that caused the massive 1969 Santa Barbara Channel oil spill. The disaster and the ensuing litigation awakened the nation's conscious to the dangers to our environment and the tragic consequences if not protected. The case was settled in 1974 shortly before trial for $9.45 million, considered a huge sum at the time.
Prior to being appointed City Attorney of Santa Barbara, he was Assistant District Attorney and Chief Trial Deputy in the Santa Barbara County District Attorney's Office. Mr. Cappello also served as a Deputy Attorney General for the State of California assigned to the Special Trials and Investigations Division. Mr. Cappello prosecuted numerous murder, business crime and major felony cases.
Mr. Cappello has been listed in Best Lawyers in America since 1992 and in Who's Who in America. He was named a "Super Lawyer" in 2007 - 2009, and he was selected as one of the Top 100 Trial Attorneys in California for 2007 by the American Trial Lawyers Association.