On April 30, 2026, the First Department issued a decision in Arena Vantage SPV, LLC v. Actionable Process LLC, 2026 NY Slip Op. 02722, holding that even though an agent had no contractual duty to enforce lenders’ rights, it still could be liable for breach of the covenant of good faith and fair dealing by failing to do so, explaining:
Although Supreme Court correctly concluded that the loan agreement precluded plaintiff from asserting a breach of contract cause of action against the borrower, we disagree with the court’s conclusion that the plaintiff stated a claim against the Deal Agent, because nothing in the loan agreement affirmatively requires the Deal Agent to take enforcement action designed to protect what plaintiff perceives to be in its own best interest. Pursuant to paragraph 9.1(a) of the loan agreement, the Deal Agent’s obligations upon default are limited to those expressly set forth in the loan agreement. Section 7.2 of the loan agreement provides that the Deal Agent “[m]ay with the consent of the Required Lenders, or at the direction of the Required Lenders shall” take certain remedial action in the event of default. Section 9.1 (c) of the loan agreement provides that the Deal Agent “shall take such action with respect to such Event of Default . . . as may be requested by the Required Lenders, or as the Deal Agent shall deem advisable or in the best interest of the Lenders.” It is undisputed that the Required Lenders have not directed the Deal Agent to take any action. The loan agreement gives the Deal Agent discretion to determine whether an action is “advisable or in the best interest of the Lenders.” Since the complaint fails to allege that the Deal Agent violated any mandatory, non-discretionary obligation under the loan agreement, it fails to state a cause of action for breach of contract by the Deal Agent.
. . .
Supreme Court correctly found that plaintiff’s cause of action for breach of the implied covenant of good faith and fair dealing was not duplicative of the breach of contract claims, as the complaint alleges conduct that is separate from the conduct constituting the alleged breach of contract and such conduct deprived the other party of the benefit of its bargain. This is true even though, as we find here, the Deal Agent did not violate the terms of the loan agreement by failing to take the enforcement action sought by plaintiff, and even though some of the allegations overlap.
(Internal quotations and citations omitted).