Broder v. MBNA Corp.

• Decision Date: 29 March 2001
• Citation: 281 AD2d 369,722 N.Y.S.2d 524
• Parties: (A.D. 1 Dept. 2001) Gerald D. Broder, etc., Plaintiff-Respondent, v. MBNA Corporation, et al., Defendants-Appellants. 3683 : FIRST JUDICIAL DEPARTMENT
• Court: New York Supreme Court — Appellate Division

Page 524

722 N.Y.S.2d 524 (A.D. 1 Dept. 2001)

Gerald D. Broder, etc., Plaintiff-Respondent, v. MBNA Corporation, et al., Defendants-Appellants.

3683

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE DIVISION: FIRST JUDICIAL DEPARTMENT

March 29, 2001

William R. Weinstein - for plaintiff-respondent,

Richard C. Pepperman, II - for defendants-appellants.

Rosenberger, J.P., Williams, Andrias, Saxe, JJ.

Order, Supreme Court, New York County (Herman Cahn, J.) entered April 10, 2000, which, in an action by a credit cardholder against a credit card issuer, insofar as appealed from, granted plaintiff's motion for class certification and denied so much of defendant's cross motion as sought summary judgment dismissing the causes of action for breach of contract and violation of General Business Law §§ 349 and 350, unanimously modified, on the law and the facts, to dismiss the cause of action under General Business Law § 350 upon plaintiff's representation in its brief that he does not wish to pursue that claim, and otherwise affirmed, without costs.

Under Delaware law, applicable to the subject credit card agreement, every contract carries with it an implied duty to perform in good faith (see, Greytak Enters. v Mazda Motors, 622 A.2d 14 [Del Ch], affd 609 A.2d 668 [Del Sup Ct]), which duty "requires a party in a contractual relationship to refrain from arbitrary or unreasonable conduct which has the effect of preventing the other party to the contract from receiving the fruits of the contract" (Wilgus v Salt Pond Investment Co., 498 A.2d 151, 159 [Del Ch]). "However, the duty arises only where it is clear from what the parties expressly agreed, that they would have proscribed the challenged conduct as a breach of the implied covenant of good faith had they thought to negotiate with respect to the matter. It follows that where the subject at issue is expressly covered by the contract, or where the contract is intentionally silent as to that subject, the implied duty to perform in good faith does not come into play." (Greytak Enters. v Mazda Motors, supra, at 22-23 [citations omitted]).

Plaintiff alleges that defendant's practice of allocating credit card payments to cash advances, which were subject to a promotional annual percentage rate ("APR"), before the balance generated by purchases, which was subject to a significantly higher APR, deprived credit cardholders of the full benefit of the promotional rate, thereby rendering the promotion deceptive, and breaching the implied covenant of good faith and fair dealing in the parties' credit card agreement. The IAS court correctly held that the issues of deceptiveness and good faith are not resolved as a matter of law by the provision in the credit card agreement that payments "will be allocated in a manner [defendant] determines", absent a provision expressly mandating the particular manner of allocating payments made by cardholders who both availed themselves of the promotional offer and have a balance due for purchases, or defining the extent. of defendant's discretion to allocate payments by such cardholders as it. wished. The language in the small print footnote to the solicitation offer, that defendant "may" allocate payments to the promotional balances first, is ambiguous (see, Sterling Natl. Mtge. Co. v Mortgage Corner, 97 F.3d 39 [3d Cir]), and,...