87 N.Y.2d 384 (1995)
A party exercising contractual discretion must do so in good faith by considering relevant information provided by the other party, even if the contract does not explicitly require investigation.
Summary
Brian Dalton, a high school student, sued Educational Testing Service (ETS) after ETS questioned the validity of his SAT score due to a significant score increase and handwriting discrepancies. Dalton provided additional information to ETS, but ETS maintained its concerns. The trial court found that ETS failed to adequately evaluate Dalton’s information and breached its contract. The Court of Appeals agreed that ETS breached its contract by failing to consider relevant information, violating its implied duty of good faith. However, it modified the remedy, requiring ETS to reconsider Dalton’s information rather than release the questioned score.
Facts
Brian Dalton’s SAT score increased by 410 points between May and November. ETS questioned the score’s validity due to the increase and handwriting discrepancies. ETS notified Dalton of its concerns and offered him options, including providing additional information. Dalton submitted information, including medical records, diagnostic test results, and statements from a proctor and fellow students. ETS obtained a second document examiner report confirming handwriting discrepancies.
Procedural History
Dalton’s father filed a proceeding to prohibit ETS from canceling the score and to compel its release. The trial court ruled that ETS breached its contract by failing to adequately evaluate Dalton’s information and ordered ETS to release the score. The Appellate Division affirmed. The New York Court of Appeals modified the Appellate Division order, requiring ETS to reconsider the information rather than release the score.
Issue(s)
- Whether ETS breached its contract with Dalton by failing to adequately consider the information he provided regarding the validity of his SAT score.
- Whether specific performance in this case should consist of requiring ETS to release the challenged SAT score or to reconsider the test-taker’s submitted evidence.
Holding
- Yes, because ETS has a duty to act in good faith and that duty includes considering relevant material submitted by the test-taker.
- The appropriate remedy is to require ETS to reconsider the submitted information because that is all ETS promised in the contract.
Court’s Reasoning
The Court reasoned that ETS had a contractual duty to consider relevant information provided by Dalton, stemming from the implied covenant of good faith and fair dealing in all contracts. The Court found that ETS framed the key issue as potential impersonation, making Dalton’s evidence of his presence during the exam relevant. The Court stated that test proctor and classmate’s statements, along with medical documentation and diagnostic test results, were relevant. The Court deferred to the lower courts’ findings that ETS Board members testified they believed evidence of Dalton’s presence during the exam was “a non-issue…not an issue at all to be considered”.
The Court emphasized that it cannot review findings of fact supported by the record. Because lower courts found that ETS failed to evaluate Dalton’s material, the Court held that ETS breached its contract. The Court distinguished cases where the testing service considered but then rejected the evidence, noting that ETS “refuses to exercise its discretion in the first instance by declining even to consider relevant material submitted by the test-taker”. The Court modified the remedy to require ETS to reconsider Dalton’s information in good faith, holding that ordering the release of the score would exceed ETS’s contractual promise and undermine the reliance of others on the validity of ETS scores. As the Court stated, “Dalton is entitled to relief that comports with ETS’ contractual promise good-faith consideration of the material he submitted to ETS”.