Corp. v. Chesebrough-Ponds, Inc., 68 N.Y.2d 954, 956, 510 N.Y.S.2d 88, 89, 502 N.E.2d 1003, 1004-05 (1986) (agreement giving rise to fraud claim separate and distinct from contract giving rise to breach of contract claim). Thus, even under a Sabo analysis, this Court would conclude that OHM has failed to plead a viable fraud claim, as no such distinction is shown herein.
Finally, as to the fraud claim, the Court will address the Bibeau case cited by the plaintiff. In Bibeau, the New York Appellate Division, Third Department stated the rule that a fraud claim can be maintained simultaneously with a breach of contract claim. 193 A.D.2d at 876, 596 N.Y.S.2d at 950. In permitting the plaintiff to move forward, the Court explained that the allegations in the Complaint "must rise to the level of material misrepresentations of present facts or promises made with a present, albeit undisclosed, intent not to perform them." Id., citing Deerfield, supra. However, a close reading of Bibeau reveals that it does not support permitting both claims to move forward in this case.
In Bibeau, the fraud claim was based on allegations that the defendant "would select horses suitable to be trained for competitive jumping." Id. The plaintiff also alleged that the defendant "had no intent of doing so but rather intended to obtain horses suitable to leasing to others and to derive a profit therefrom without plaintiff's knowledge and at his expense." Id. The breach of contract claim was premised on allegations that the defendant "had breached his contractual obligations by mistreating the horses and supplying them with improper medical care," and by improperly leasing the horses. 193 A.D.2d at 876, 596 N.Y.S.2d at 949. Insofar as the fraud claim and the breach of contract claim overlap, Bibeau would seem to support the plaintiff's position. However, although citing to Deerfield, the Court did not analyze Deerfield, or address the factual underpinning of the case. As stated above, the agreement in Deerfield giving rise to the fraud claim was a separate and distinct agreement from the contract giving rise to breach of contract claim. 68 N.Y.2d at 956, 510 N.Y.S.2d at 89, 502 N.E.2d at 1004-05. This Court finds the Deerfield distinction to be vital to a determination of whether a claim for fraud in the inducement should go forward. If there is no allegation of an agreement, separate and distinct from the contract giving rise to the claim for breach, then a claim for fraud can be bootstrapped to any claim for breach merely by alleging that the defendant did not intend to perform from inception. The Court cannot believe this is the intent of Deerfield or Sabo. The Court finds that the analysis in Bibeau is incomplete, and thus, Bibeau is suspect authority for the plaintiff's position.
D. Dismissal of Fourth Claim
OHM alleges as its fourth claim, breach of the covenant of good faith and fair dealing. OHM specifically alleges that HESI "has breached the covenant of good faith and fair dealing implied in the Contract (at issue herein) by, inter alia (sic), fraudulently refusing to accept or acknowledge increased estimation costs submitted by OHM.
GM argues that OHM has not stated a viable claim in that New York does not recognize a simultaneous claim for breach of the covenant of good faith and fair dealing with a breach of contract claim.
As a general rule, "the cause of action alleging a breach of good faith is duplicative of a cause of action alleging breach of contract, since every contract contains an implied covenant of good faith and fair dealing." Apfel v. Prudential-Bache Securities Inc., 183 A.D.2d 439, 439, 583 N.Y.S.2d 386, 387 (1st Dep't 1992), modified on other grounds 81 N.Y.2d 470, 616 N.E.2d 1095, 600 N.Y.S.2d 433 (1993), citing Gross v. Neuman, 53 A.D.2d 2, 5, 385 N.Y.S.2d 46 (1st Dep't 1976); Jaffe v. Paramount Communications Inc., 222 A.D.2d 17, 22, 644 N.Y.S.2d 43, 47 (1st Dep't 1996). "Implicit in that obligation is that no party will do anything to destroy or injure the right of another party under the contract. The covenant of good faith and fair dealing precludes each party from engaging in conduct that will deprive the other party of the benefits of their agreement." Smith v. Brown & Jones, 167 Misc. 2d 12, 19, 633 N.Y.S.2d 436, 441 (Sup. Ct. New York County 1995), citing Birnbaum v. Birnbaum, 73 N.Y.2d 461, 466, 541 N.Y.S.2d 746, 539 N.E.2d 574 (1989); Wilf v. Halpern, 194 A.D.2d 508, 599 N.Y.S.2d 579 (1st Dept. 1993). The question before this Court is whether a claim for an alleged breach of the covenant of good faith and fair dealing can be pleaded as a separate and distinct claim, or whether it is merely redundant of the breach of contract claim.
As stated in Canstar v. J.A. Jones Const. Co., a separately pleaded claim for breach of a covenant of good faith and fair dealing "is redundant since a breach of an implied covenant of good faith and fair dealing is intrinsically tied to the damages allegedly resulting from a breach of the contract." 212 A.D.2d 452, 453, 622 N.Y.S.2d 730, 731 (1st Dep't 1995). The Second Circuit has iterated this rule. See, e.g., Fasolino Foods Co., Inc. v. Banca Nazionale Del Lavoro, 961 F.2d 1052, 1056 (2d Cir. 1992) ("parties to an express contract are bound by an implied duty of good faith, 'but breach of that duty is merely a breach of the underlying contract.'" Geler v. National Westminster Bank USA, 770 F. Supp. 210, 215 (S.D.N.Y. 1991)).
As stated previously herein, OHM's first claim is for breach of contract. One way in which OHM alleges that HESI breach the contract is by "refusing, without justification, to recognize the contractual right of OHM to re-estimate the estimated cost set out at Section 4.1.2 of the Contract when final desin documents were complete." Complaint at P 43. OHM's Fourth claim stems from the same facts. OHM alleges that the failure to accept or acknowledge increased estimated costs breach the covenant of good faith and fair dealing. Complaint at P 57. Thus, not only does the plaintiff's fourth claim arise from the same facts as the breach of contract claim, but the damages flowing from each alleged breach would be the same. See Geler, 770 F. Supp. at 215; Canstar, 212 A.D.2d at 453, 622 N.Y.S.2d at 731.
Based on the reasons stated above, GM's motion to dismiss the plaintiff's fourth claim is granted.
For the reasons just stated, the Court hereby grants GM's motion to consolidate, and further, grants GM's motions to dismiss OHM's third and fourth claims as against all parties.
IT IS SO ORDERED.
Dated: Jan. 18, 1997
in Binghamton, NY
Thomas J. McAvoy
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