DURATION MUNICIPAL FUND v. MORGAN SECURITIES INC (2010)

Judgment, Supreme Court, New York County (Bernard J. Fried, J.), entered September 23, 2009, dismissing this action for breach of implied covenant of good faith and fair dealing, unanimously affirmed, with costs.

A cause of action based upon a breach of a covenant of good faith and fair dealing requires a contractual obligation between the parties (see Phoenix Capital Invs. LLC v. Ellington Mgt. Group, L.L.C., 51 AD3d 549, 550 [2008]; Triton Partners v. Prudential Sec., 301 A.D.2d 411 [2003] ). Here, plaintiffs cannot sustain their claim for breach of the convenant of good faith and fair dealing because the contractual relationships governing the relevant transactions were between plaintiffs and an entity other than defendant, namely, a nonparty affiliate of defendant. Indeed, the contract in question specifically contemplates that the transactions complained of will be governed by other agreements, but none of the agreements referred to were between plaintiffs and defendant. Furthermore, the complaint does not allege facts that J.P. Morgan Securities Inc. acted in bad faith.

In light of our determination, we need not reach the parties' remaining arguments.