Summary of Hobin v. Coldwell Banker Residential Affiliates, Inc. (2000)
Facts: P, who operated a real estate office, contacted D about becoming one of its franchises; there were already offices in the area; P met with a D’s recruiter, who outlined franchise policy, and P relied on these discussions, in part, to enter into a contract to franchise; P brought suit for injunctive relief against D, seeking to stop the grant of a franchise to a nearby, competing broker
P/S: Trial court dismissed P’s claims of breach of the implied covenant of good faith and fair dealing, and breach of contract for failure to state a claim
Issue: Whether the trial court erred in dismissing P’s claim of breach of the implied covenant of good faith and fair dealing
Holding: No, AFFIRMED FOR D
Rule: Under California law, the express terms of a contract always limit any implied covenant, and a party may not pursue a cause of action for breach of an implied covenant where the supposed covenant contradicts the express term.
Rationale: Implied terms should never by read to vary the express terms of the contract. The franchise agreement provided, in pertinent part, that D may franchise others to locate and operate additional real estate brokers businesses within the market area within which P conducts and operates the Franchised Business. This was an expressed term of the K, so it is applicable to the Rule.