Black v. MTV Networks

In Black v. MTV Networks, 172 A.D.2d 8 [1st Dep't 1991] the plaintiffs had entered into a contract with MTV. In litigating plaintiffs' breach of contract damages claim, "In the course of discovery, MTV learned the undisputed fact that from approximately 1981 to 1984, when he frequently worked for MTV on a series of successive, short-term agreements which preceded the contract of issue, plaintiff Melvyn Black had secretly made gifts totaling thousands of dollars to MTV's director of personnel and that, in 1985, he made an interest-free loan of $30,000 to another MTV employee. MTV then moved for summary judgment dismissing the amended complaint on the ground that plaintiffs are precluded from any recovery for breach of contract since they had fraudulently obtained the contract in suit and had breached the implicit covenant of good faith and fair dealing in that contract by making such gifts and loan." 172 A.D.2d at 9-10. Black did not dispute that these payments were made but had contended that "they were not intended to influence the behavior of MTV employees, but were given for personal reasons" and "that recipient of the gifts was not a decision maker, but exercised purely ministerial functions." Id. at 10. The First Department held: "Regardless of intent, motive, illicit purpose, or pecuniary loss, such secret payments improperly create interests for agents that are "adverse to that of their principal" and the principal's complete knowledge and approval is required of "any substantial advantage received by an agent" from third persons. . . . And so, the concealment of such benefits from the principal, in and of itself, violates the covenant of fair dealing and good faith implied in every contract. . . . As a result, whether plaintiff's payments were made to strangers or friends in need, the mere non-disclosure of those dealings served to permit the employer, MTV, to terminate the agreement at issue." (See Black, 172 A.D. 2d. at 11-12.)