Chapter 2 - § 2.2 • GOOD FAITH AND FAIR DEALING

• Jurisdiction: Colorado

§ 2.2 • GOOD FAITH AND FAIR DEALING

§ 2.2.1—Express Covenant Of Good Faith And Fair Dealing

The Colorado Supreme Court, in the Thomas Decker case, made it clear that a claim for breach of an express covenant of good faith and fair dealing sounds in contract.⁶ Decker v. Browning-Ferris Indus. of Colo., Inc., 931 P.2d 436, 446 (Colo. 1997). It is less clear what types of promises will create such an express covenant. In the two cases consolidated in Thomas Decker, the company had given Mr. Decker every pay increase for which he was eligible over a five-year period, and sent him a letter informing him that he would receive a "discretionary" $400 bonus, congratulating him on having a successful winter season with the company, stating that it appreciated his work, and advising him that it "look[ed] forward to a long and lasting relationship" with him. Id. at 438. The company stipulated at trial that it had promised to treat him fairly. Id. at 439. The company had provided similar treatment and had made similar statements to the other plaintiff, Mr. Castillo. Id. at 438. Both plaintiffs claimed that they had been discharged in violation of a progressive-discipline policy. Id.

The Colorado Supreme Court opinion in the Thomas Decker case did not address whether an express promise of fair treatment would be enforceable only if the employer had made other judicially enforceable representations. It did not clear this up in its opinion in the related Russell Decker case, in which it noted that "the elements of such a claim or the proof necessary to sustain the claim . . . are not before us and were not before us in Thomas Decker." Decker v. Browning-Ferris Indus. of Colo., Inc., 947 P.2d 937, 940 (Colo. 1997).

In Soderlun v. Public Service Co., the Colorado Court of Appeals held that an express covenant "cannot limit an employer's right to discharge without cause, unless there is an express or implied promise, independent of the covenant of good faith itself, restricting that right." 944 P.2d 616, 623 (Colo. App. 1997). However, that decision is based on principles applied in cases involving an implied covenant of good faith and fair dealing, where such a covenant is enforced as long as it "does not inject new substantive terms into a contract or change its existing terms." Id.⁷

A claim for breach of an express covenant of good faith and fair dealing can be based on an employer's statement that either discloses a promissory intent or is one that the employee could reasonably conclude constituted a commitment by the employer. This could include a breach of the employer's written and...