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How California Courts Should Handle Implied Good-Faith Obligation

By Kenneth A. Adams
August 29, 2011

[Editor's Note: This summer, the New York Supreme Court issued a ruling explaining why it refused to sanction film producer Crusader Entertainment for seeking to serve restraining orders ' on book author Clive Cussler's New York publisher and agent ' over an increased judgment the Los Angeles Superior Court had awarded Crusader in litigation with Cussler over the motion picture Sahara. Crusader Entertainment LLC v, Cussler, 107376/08 (N.Y. Sup. Ct., N.Y. County). The California jury had found that Cussler breached an implied covenant of good faith and fair dealing when he rejected a series of screenplays developed for the movie, based on his novel Sahara. The California Court of Appeal later rejected the jury's verdict on the implied covenant issue. In the article that follows, contract-drafting expert Kenneth A. Adams offers recommendations for California courts to consider on what he believes is a faulty court of appeal decision on a still cloudy, implied covenant issue in the state's jurisprudence.]

In Cussler v. Crusader Entertainment LLC, B208738 (Cal. Ct. App. 2010), the California Court of Appeal, Second District, rejected Crusader's argument that when author Clive Cussler refused to approve Crusader's many proposed screenplays for the film Sahara, Cussler breached the implied duty of good faith that is read under California law into every contract. The California Supreme Court subsequently denied petitions for review filed by Cussler and Crusader. (This author filed an amicus curiae letter in support of Crusader's petition for review.)

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