Badgett v. Security State Bank
Court of Appeals of Washington
786 P.2d 302 (1990)
Badgett (plaintiff) had a six-year lending relationship with Security State Bank (defendant) tied to his dairy business. When Badgett proposed using proceeds from a federal Dairy Termination Program bid to satisfy his loan, Security's loan committee refused to even consider the proposal, and Badgett's bid failed. Badgett presented evidence that the bank's loan officer, Cooke, may have misrepresented or misunderstood the proposal when relaying it to the loan committee. After Badgett fell behind on payments and eventually agreed to sell his dairy assets to satisfy the debt, he sued Security for breach of the implied covenant of good faith and fair dealing, and the trial court dismissed his claims outright, prompting his appeal.
Whether the scope of an implied duty of good faith and fair dealing in a contract can be expanded by the parties' course of dealing so as to create a jury question about whether that duty was breached.