In Carma Developers (California), Inc. v. Marathon Development California, Inc., 2 Cal. 4th 342, 6 Cal. Rptr. 2d 467, 826 P.2d 710 (Cal. 1992), the California Supreme Court discussed the covenant of good faith and fair dealing in regard to a provision in a lease concerning the lessor's, Marathon's, right to refuse consent to a sublease and the lessor's right in the lease on notice of intent to sublease to terminate the lease and enter into a new lease with the proposed sublessee. Id. at 713. In that case, when the lessee, Carma, requested that Marathon approve a sublease, which was to pay Carma a substantially higher rent than Carma was paying Marathon, Marathon terminated the lease and attempted to lease the property at the higher rent to Carma's proposed sublessee. Id. Carma contended that Marathon's refusal to consent to the sublease and its termination of the lease with Carma violated the covenant of good faith and fair dealing. Id. at 714. The California Supreme Court discussed the covenant in the opinion. Id. at 726-29. The court stated, "The covenant of good faith finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith." Id. at 726. Transcontinental relies on the following language from Carma: In the case of a discretionary power, it has been suggested the covenant requires the party holding such power to exercise it "for any purpose within the reasonable contemplation of the parties at the time of formation--to capture opportunities that were preserved upon entering the contract, interpreted objectively." Id. at 727 In a footnote, the court continued: In this context, breach of the covenant of good faith has been characterized as an attempt by the party holding the discretionary power to use it to recapture opportunities forgone in contracting. "Bad faith performance occurs precisely when discretion is used to recapture opportunities forgone upon contracting--when the discretion-exercising party refuses to pay the expected cost of performance." Id. at 727 n.11. Contrary to Transcontinental's argument, this statement was not a statement of California law but only a recognition of what one scholar had written in a law review. The court declined to devise "a rule of all-encompassing generality" and discussed the principles that have emerged from its decisions. Id. at 727. The court stated that objectively unreasonable conduct could breach the covenant. Id. The court observed, "It is universally recognized the scope of conduct prohibited by covenant of good faith is circumscribed by the purposes and express terms of the contract." Id.