Bevis v. Terrace View Partners, LP, 244 Cal. Rptr. 3d 797 (2019)

Citation: Bevis v. Terrace View Partners, LP, 244 Cal. Rptr. 3d 797 (2019)
Parent Document: Bevis v. Terrace View Partners, LP, 244 Cal. Rptr. 3d 797 (2019)
Jurisdiction: California (state)
Effective Date: 2019-02-28
Original Source: https://www.courtlistener.com/opinion/6240337/bevis-v-terrace-view-partners-lp/ ↗

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Special Instruction No. 66 illustrates the risk of basing special jury instructions on case language. Read in context, it is clear that Automatic Vending court's reference to "rights of the other" was a reference to the other contracting party's rights under the contract . However, the second sentence of Special Instruction No. 66 overbroadly instructs that a "party with the discretion to set a price term in a contract or make a decision affecting the rights of the other contracting party must do so in an objectively reasonable manner." (Italics added.) The jury could reasonably interpret the second sentence to mean that when a contract gives a party discretion to make any decision that affects any rights of the other party, the party is liable for breach of the implied covenant of good faith and fair dealing if the party makes an objectively unreasonable decision. The jury could accordingly conclude defendants breached the implied covenant of good faith and fair dealing by setting rental rates that were unreasonably high, because the high rates interfered with plaintiffs' property right to sell their homes in place, even though the rental agreements authorized defendants to set those rates.

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