Good
faith and fair dealing
A
claim for a breach of the duty of good faith and fair dealing is a contract
claim3 under which a plaintiff has to establish the following in order to
succeed on its claim: “(1) the existence of a contract, (2) breach of the
contract, and (3) damages which flow from the breach.” Life Care Ctrs. of Am.,
Inc. v. Charles Town Assocs. Ltd. P’ship, 79 F.3d 496, 514 (6th Cir. 1996). See
also Sewer Auth. of City of Scranton v. Pa. Infrastructure Inv. Auth., 81 A.3d
1031, 1041-42 (Pa. Commw. Ct. 2013) (“The elements of a breach of contract are
(1) the existence of a contract, (2) a breach of the duty imposed by the contract
and (3) damages resulting from the breach.” (quoting Orbisonia-Rockhill Joint
Mun. Auth. v. Cromwell Twp., 978 A.2d 425, 428 (Pa. Cmmw. Ct. 2009))).
3
Under both Pennsylvania and Tennessee
law, a claim for breach of the duty of good faith and fair dealing is a breach
of contract action. See McAllister v. Royal Caribbean Cruises, Ltd., Civ. A.
No. 02-2393, 2003 WL 23192102, at *4 (E.D. Pa. Sept. 30, 2003) (citing Fraser
v. Nationwide Mut. Ins. Co., 135 F. Supp. 2d 623, 643 (E.D. Pa. 2001); Blue
Mountain Mushroom Co. v. Monterey Mushroom, Inc., 246 F. Supp. 2d 394, 400
(E.D. Pa. 2002)); see also Fountain Leasing, LLC v. Kloeber, Civ. A. No.
12-317, 2013 WL 4591622, at *4 (E.D. Tenn. Aug. 28, 2013) (stating that, under
Tennessee law, a claim for breach of the implied covenant of good faith and
fair dealing “serves as part of a breach of contract action rather than serving
as a cause of action in and of itself.” (citing Lyons v. Farmers Ins. Exch., 26
S.W.3d 888, 894 (Tenn. Ct. App. 2000)).
Damages
Moreover,
in order to recover on its claim for breach of the duty of good faith and fair
dealing, a plaintiff must prove damages resulting from the alleged breach with
reasonable certainty. See ATACS Corp. v. Trans World Commc’ns, Inc., 155 F.3d
659, 669 (3d Cir. 1998) (stating that the general rule in Pennsylvania is that
the injured party must prove damages from breach of contract with reasonable
certainty (citations omitted))….
There
are three “theories of damages to remedy a breach of contract: ‘expectation’
damages, ‘reliance’ damages, and ‘restitution’ damages.” ATACS, 155 F.3d at 669
(citing Trosky v. Civil Serv. Comm’n, 652 A.2d 813, 817 (Pa. 1995); Restatement
(Second) of Contracts § 344 (1981)); see also Trosky, 652 A.2d at 817 (noting
that remedies for breach of contract “are designed to protect either a party’s
expectation interest ‘by attempting to put him in as good a position as he
would have been had the contract been performed’ . . . ; his reliance interest
‘by attempting to put him back in the position in which he would have been had
the contract not been made’; or his restitution interest ‘[by requiring] the
other party to disgorge the benefit he has received by returning it to the
party who conferred it’” (quoting Restatement (Second) of Contracts, § 344,
Comment a))….
