METROPOLITAN LIFE INSURANCE COMPANY and JEFFERSON-PILOT LIFE INSURANCE COMPANY, Plaintiffs, v. RJR NABISCO, INC. and F. ROSS JOHNSON, Defendants, 716 F. Supp. 1504

Summary

The investors filed motions for summary judgment on the counts of their amended complaint that alleged breach of the implied covenant of good faith and fair dealing, and a cause of action in equity, against the corporation and its CEO, in connection with the corporation's LBO of its shareholders. The corporation and CEO filed cross-motions for judgment on the pleadings or, in the alternative, for summary judgment. The court denied the investors' motions and granted the corporation and CEO summary judgment. It held that the fruits of the indentures did not include an implied restrictive covenant to prevent the incurrence of new debt to facilitate the LBO. The court reasoned that the investors did not invoke an implied covenant of good faith to protect a legitimate, mutually contemplated benefit; rather, they sought to have the court create an additional benefit for which they did not bargain. It found that the investors' cause of action in equity also failed, because they were informed ...