Davis v. ODN I GmbH: Express Termination Rights, the Implied Covenant, and Tortious Interference under New York Law

I. Introduction

The Second Circuit’s summary order in Davis v. ODN I GmbH, No. 25‑860 (2d Cir. Nov. 21, 2025), arises out of a complex cross‑border debt restructuring involving a Brazilian oil and gas conglomerate and its noteholders. At its core, the case turns on a familiar but critical set of New York contract‑law questions:

How far does the implied covenant of good faith and fair dealing reach when a contract expressly allows one side to terminate “at any time”?
Can an allegedly bad‑faith termination meant to avoid a contingent bonus support a tortious interference claim?
Do reimbursement obligations for fees and expenses survive the termination of an engagement where the contract expressly ends upon removal, but includes survival clauses elsewhere?

The plaintiff, Eugene Davis, was appointed as a “Creditor Representative” for noteholders in an Odebrecht‑affiliated financing structure and entered into a New York–law–governed engagement letter with Odebrecht‑related entities (the “OOG Defendants”). He was removed from that role by a majority of noteholders before a major “Principal Reduction” triggered by a later restructuring, which, if he had still been in office, would have entitled him to a bonus. After his removal he incurred additional fees and expenses and sought reimbursement.

Davis sued the OOG Defendants and certain investor noteholders (Contrarian Capital Management, LLC, and Joshua Weisser, the “Investor Defendants”), asserting:

Breach of the covenant of good faith and fair dealing (against the OOG Defendants).
Tortious interference with contract (against the Investor Defendants).
Breach of contract relating to reimbursement of post‑termination expenses (against the OOG Defendants).

The Southern District of New York (Judge Margaret M. Garnett) dismissed all claims under Rule 12(b)(6). The Second Circuit affirmed in full, but, notably, affirmed the good‑faith claim on a different ground than the district court. While the opinion is a summary order and therefore non‑precedential under Second Circuit rules, it clearly and tightly applies established New York law to the recurring situation where a party is terminated just before a contingent compensation event.

II. Summary of the Opinion

The Second Circuit (Judges Leval, Parker, and Sullivan) affirmed the district court’s March 31, 2025 judgment dismissing Davis’s claims.

A. Standard of Review

De novo review of the Rule 12(b)(6) dismissal, accepting the complaint’s factual allegations as true and drawing reasonable inferences in Davis’s favor.
Plausibility standard under Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal.
Authority to affirm on “any basis supported by the record” (Coulter v. Morgan Stanley).

B. Holdings by Claim

Breach of the implied covenant of good faith and fair dealing (against OOG Defendants)
The Court held that Davis failed to state a claim. Because the indentures and the engagement letter expressly allowed a majority of noteholders to remove the Creditor Representative “at any time,” New York law barred using the implied covenant to impose limits inconsistent with that express contractual right. The OOG Defendants had no duty to resist or override the noteholders’ decision to remove him.
Tortious interference with contract (against Investor Defendants)
The Court held that Davis’s claim failed because he did not allege an actual breach of the engagement letter. The contract expressly permitted termination at any time and provided that Davis was not entitled to the incentive fee for a post‑termination Principal Reduction. Without an underlying breach, a tortious interference claim cannot stand under New York law.
Breach of contract – reimbursement of expenses (against OOG Defendants)
The Court held that the engagement letter, by its own terms, ceased to be effective upon Davis’s removal. Although other provisions of the letter contained survival clauses, the expense‑reimbursement provision did not. Given the clear drafting, the Court refused to write a survival clause into section five, and concluded that Davis had no contractual right to reimbursement for 2023–2024 expenses incurred after termination.

Accordingly, the Second Circuit affirmed the dismissal of all remaining claims.

III. Factual and Contractual Background

A. The Odebrecht‑Related Financing Structure and Davis’s Role

The underlying transactions involve a Brazilian energy conglomerate, identified as Odebrecht‑affiliated entities (collectively, the “OOG Defendants”). In 2017, these entities issued two tranches of secured notes under two indentures:

Tranche 1 notes, and
Tranche 2 notes.

The indentures granted beneficial holders of these notes (the “Noteholders”) the power to appoint a Creditor Representative to represent their interests. Davis was chosen by the Noteholders and, as Creditor Representative, entered into an engagement letter with the OOG Defendants on December 22, 2017. This letter:

Was governed by New York law.
Provided for periodic payments and reimbursement of certain expenses.
Conditioned his compensation and reimbursement on his continued status as Creditor Representative, “unless or until [his] resignation or removal becomes effective.”

B. The Engagement Letter’s Key Terms

Three contractual features are central to the case:

Term and termination
The engagement letter expressly stated that it:
“shall remain effective until the removal or resignation of the Creditor Representative, in accordance with the Indentures.”
The Indentures, in turn, permitted removal of the Creditor Representative “at any time” by Noteholders holding at least 50% of the aggregate outstanding principal amount of Tranche 1 notes.
Bonus / incentive fee tied to “Principal Reduction”
The letter provided for a bonus payment due upon a “Principal Reduction,” defined as a reduction to the outstanding principal amount of the Tranche 2 notes. Crucially, the contract structure (as understood by the panel) made this incentive contingent upon Davis’s status: he would not be entitled to the bonus if the Principal Reduction occurred after he had been removed.
Expenses and reimbursements
Section five addressed Davis’s entitlement to reimbursement of fees and expenses, including attorneys’ fees. The letter granted this right only while the agreement was “effective.” Other sections of the engagement letter (e.g., sections eight, nine, and ten) contained explicit survival clauses, showing that the parties knew how to provide for post‑termination survival when they wanted to. Section five did not.

C. Removal, Subsequent Restructuring, and Litigation

September 2021: A majority of the Noteholders invoked their contractual power to remove Davis as Creditor Representative.
Nearly two years later: A Principal Reduction occurred as a result of a debt restructuring, triggering what would have been Davis’s bonus had he remained in office.
Davis’s stance: He claimed entitlement to:
- The incentive bonus, despite his prior removal.
- Reimbursement for various expenses, including attorneys’ fees, incurred in 2023 and 2024—long after his removal.
OOG Defendants’ response: They refused to pay the bonus or the later expenses.

Davis then commenced an action in the Southern District of New York asserting:

Breach of contract (for failure to pay the bonus and to reimburse expenses),
Breach of the covenant of good faith and fair dealing (alleging his termination was in bad faith to avoid the bonus), and
Tortious interference with contract (alleging the Investor Defendants threatened and caused his removal to avoid paying his incentive fee).

The district court dismissed all claims. On appeal, Davis challenged only:

The good‑faith and fair‑dealing claim,
The tortious interference claim (as to one count), and
The breach of contract claim for reimbursement of expenses.

IV. Analysis of the Court’s Reasoning

A. The Implied Covenant of Good Faith and Fair Dealing

1. The legal backdrop

Under New York law, every contract includes an implied covenant of good faith and fair dealing. It:

Obligates parties not to act in a way that would destroy or injure the other party’s right to receive the benefits of the contract.
Operates as a gap‑filler to enforce the reasonable expectations of the parties where the contract is silent or ambiguous.

However—and this is critical—New York courts consistently hold that the implied covenant:

Cannot contradict or undermine express terms of a contract.
Cannot create new substantive rights or obligations that are inconsistent with what the parties agreed to in writing.

The Second Circuit relied on two key precedents:

In Touch Concepts, Inc. v. Cellco P’ship, 788 F.3d 98 (2d Cir. 2015)
There, the Court stated explicitly that courts may not, under the guise of the implied covenant, “impose an obligation that is inconsistent with express contractual terms.”
Murphy v. American Home Products Corp., 58 N.Y.2d 293 (1983)
The New York Court of Appeals held that when an employer reserves an unrestricted right to discharge an employee, courts cannot imply a limitation—such as a requirement of “just cause”—that contradicts that express right.

These authorities underscore a central theme: where a contract explicitly confers a unilateral right (such as an at‑will termination right), courts will not retroactively condition or restrict that right based on generalized notions of fairness.

2. Application to Davis’s good‑faith claim

Davis alleged that his termination as Creditor Representative violated the OOG Defendants’ duty of good faith and fair dealing because, in his view, it was carried out to prevent him from collecting his incentive bonus once the restructuring‑driven Principal Reduction occurred.

But the Court emphasized that:

The engagement letter and the indentures explicitly allowed a majority of the Noteholders to remove the Creditor Representative “at any time.”
Davis’s own agreement recognized this and conditioned his compensation and engagement on his continued appointment.

From this, the Court drew two key conclusions:

No duty to resist the Noteholders’ exercise of rights
The OOG Defendants had no obligation to dissuade or defy the Noteholders when they chose to remove Davis. The structure of the deal allocated removal power to the Noteholders; the issuer could not be obligated, under an implied covenant theory, to interfere with that contractual power.
No re‑writing of the termination clause via good faith
To accept Davis’s claim would have required the court to re‑write the removal clause to something like: “The Creditor Representative may be removed at any time, except when the purpose is to avoid payment of a bonus.” New York law, as articulated in In Touch Concepts and Murphy, does not permit that. The implied covenant cannot be used to transform an unrestricted “at any time” removal right into a limited or cause‑based one.

On that basis, the Court held that Davis failed to state a claim for breach of the covenant of good faith and fair dealing. This is a clear reaffirmation that in New York, courts will enforce clear termination rights even where their exercise may appear opportunistic or unfair, so long as those rights are unqualified in the contract itself.

B. Tortious Interference with Contract

1. Elements under New York law

The Second Circuit recited the well‑settled elements of tortious interference with contract, citing Kirch v. Liberty Media Corp., 449 F.3d 388 (2d Cir. 2006). A plaintiff must allege:

The existence of a valid contract between the plaintiff and a third party;
The defendant’s knowledge of that contract;
The defendant’s intentional procurement of the third party’s breach of the contract, without justification;
An actual breach of the contract; and
Resulting damages.

The Court also cited Jack L. Inselman & Co., Inc. v. FNB Financial Co., 41 N.Y.2d 1078 (1977), which emphasizes that an actual breach by the third party is “axiomatic” for a tortious interference claim to exist.

2. Davis’s theory against the Investor Defendants

Davis claimed that Contrarian and Weisser, as Investor Defendants and noteholders, threatened him and induced the OOG Defendants to remove him as Creditor Representative to prevent him from earning his incentive bonus when the Principal Reduction later occurred. In essence, he alleged they orchestrated his termination in bad faith.

But the tortious interference claim depends on one indispensable predicate: the OOG Defendants must have breached the engagement letter. Without a breach, there can be no tortious interference, regardless of motive or tactics.

3. Why there was no breach

The Court concluded that no breach could be alleged plausibly because:

The engagement letter expressly authorized the Noteholders to remove Davis at any time, and Davis’s contract incorporated that power.
The contract structure explicitly provided that Davis would not be entitled to an incentive fee if the Principal Reduction occurred after his removal.

In other words, the risk that he could be removed prior to the fee‑triggering event, and thereby lose the bonus, was baked into the bargain. When the Noteholders exercised their removal right, and when the OOG Defendants honored that removal, they acted consistently with the contract’s terms.

Because there was no underlying breach by the OOG Defendants:

The “actual breach” element of tortious interference failed.
This failure was dispositive; the Court did not need to reach justification or other elements.

Accordingly, the Second Circuit affirmed dismissal of the tortious interference claim. The opinion reinforces the principle that a tortious interference claim cannot be used to circumvent the limitations of the underlying contract, particularly where the contract itself contemplates and allows the conduct complained of.

C. Breach of Contract: Survival of Reimbursement Obligations

1. The issue

The final issue concerned Davis’s claim for breach of contract against the OOG Defendants for refusing to reimburse:

“fees and expenses, including attorneys’ fees, incurred by Davis” in 2023 and 2024.

The central question was: Did the engagement letter obligate OOG to reimburse expenses incurred after Davis had been removed and the agreement had ceased to be effective?

2. Contract interpretation and survival clauses

The engagement letter stated that:

“This Agreement . . . shall remain effective until the removal or resignation of the Creditor Representative.”

The panel treated this as a clear statement of the agreement’s temporal scope: once Davis was removed, the engagement letter (including its ordinary reimbursement obligations) ceased to be effective. That conclusion was strengthened by another drafting feature:

Some provisions of the engagement letter—notably sections eight, nine, and ten—contained explicit survival clauses, indicating they would remain effective even after termination.
Section five, which addressed expense reimbursement, did not contain any survival language.

Citing Georgitsi Realty, LLC v. Penn‑Star Ins. Co., 702 F.3d 152 (2d Cir. 2012), and In re Matco‑Norca, Inc., 802 N.Y.S.2d 707 (2d Dep’t 2005), the Court reiterated that:

Courts “may not write into a contract conditions the parties did not insert by adding or excising terms under the guise of construction, nor may [a court] construe the language in such a way as would distort the contract’s apparent meaning.”

It also invoked Brown v. Health Care & Ret. Corp. of Am., 25 F.3d 90 (2d Cir. 1994), which recognized that when parties use particular terms or structures in some parts of a contract but omit them in others, courts infer that the difference is intentional—i.e., “the parties intended to draw a distinction.”

3. Application

Applying these rules:

The explicit survival clauses in some sections show the parties knew how to make obligations survive termination.
The absence of such language in the expense provision strongly suggests they did not intend post‑termination reimbursement duties.
Because the agreement “remained effective” only until removal, and section five lacked survival language, reimbursement duties for expenses incurred in 2023–2024 (well after removal) did not exist.

Therefore, Davis failed to state a breach of contract claim for those expenses. The Court refused to retroactively expand the reimbursement provision to cover post‑termination expenditures.

V. Precedents Cited and Their Influence

Although this is a non‑precedential summary order, it sits squarely within a network of established New York and Second Circuit authority:

Case	Court / Year	Proposition Relied Upon	Use in Davis
In Touch Concepts, Inc. v. Cellco P’ship	2d Cir. 2015	Implied covenant of good faith & fair dealing cannot impose duties inconsistent with express contract terms.	Used to reject Davis’s attempt to limit an express “at any time” termination right via implied covenant.
Murphy v. American Home Products Corp.	N.Y. Ct. App. 1983	Courts cannot infer limits (e.g., “just cause”) on an employer’s unrestricted right to discharge; no implied tenure where at‑will status is express.	Analogy: Just as courts cannot convert at‑will employment into for‑cause employment, they cannot impose good‑faith limits on an unqualified removal right.
Kirch v. Liberty Media Corp.	2d Cir. 2006	Sets out elements of tortious interference with contract under New York law, including requirement of actual breach.	Framework for dismissal of tortious interference claim; lack of breach was fatal.
Jack L. Inselman & Co., Inc. v. FNB Financial Co.	N.Y. Ct. App. 1977	A tortious interference claim requires a breach of the underlying contract by the third party.	Reinforced that without a breach of the engagement letter, Davis’s interference claim cannot stand.
Georgitsi Realty, LLC v. Penn‑Star Ins. Co.	2d Cir. 2012	Courts may not add or delete contractual terms under guise of interpretation; must respect the contract’s apparent meaning.	Used to refuse adding a survival clause to the reimbursement provision of the engagement letter.
In re Matco‑Norca, Inc.	N.Y. App. Div. 2d Dep’t 2005	Same general proposition as Georgitsi regarding impermissible rewriting of contracts.	Cited within Georgitsi quotation, reinforcing strict textualism in contract interpretation.
Brown v. Health Care & Ret. Corp. of Am.	2d Cir. 1994	When parties include terms in one provision but omit them in another, courts infer intentional distinction.	Used to infer that the absence of a survival clause in section five was intentional, limiting reimbursement obligations.
Palmer v. Amazon.com, Inc.	2d Cir. 2022	Articulates Rule 12(b)(6) standard: accept allegations as true, draw reasonable inferences in plaintiff’s favor.	General standard of review for the appeal.
Coulter v. Morgan Stanley & Co. Inc.	2d Cir. 2014	Appellate court may affirm on any basis supported by the record, even if different from district court’s reasoning.	Justified affirming Davis’s good‑faith claim dismissal on a different rationale than the district court.
Bell Atl. Corp. v. Twombly	U.S. Sup. Ct. 2007	Pleading must state a claim that is plausible on its face.	Standard for sufficiency of complaint.
Ashcroft v. Iqbal	U.S. Sup. Ct. 2009	Elaborates plausibility standard and requirement for non‑conclusory factual allegations.	Applied in assessing whether Davis plausibly alleged breach or wrongful conduct.

VI. Complex Concepts Simplified

1. Implied Covenant of Good Faith and Fair Dealing

Every contract under New York law includes an unwritten promise that neither side will act in a way that deprives the other of the contract’s benefits. However:

It is a gap‑filling concept; it operates where the contract is silent or ambiguous.
It cannot override express terms. If the contract clearly gives a right (like termination “at any time”), courts will not use good faith to claw that right back.
It does not create new rights; it protects the rights the contract already gives.

In Davis, the covenant could not transform an explicit “at any time” removal right into a “only for good reason” right.

2. Tortious Interference with Contract

This is a tort claim against a non‑party to a contract, alleging that the non‑party improperly caused a breach. To succeed, you must show:

You had a valid contract with someone else.
The defendant knew about that contract.
The defendant intentionally caused that other party to break the contract.
The contract actually was broken (breached).
You suffered damage as a result.

If there is no breach—because the contract allowed the conduct—then there is no tortious interference claim, regardless of the defendant’s motive.

3. Survival Clauses

A survival clause states that certain obligations continue even after a contract is terminated or expires. For example:

“The confidentiality obligations in Section X shall survive termination of this Agreement.”

In Davis:

Some sections of the engagement letter had survival clauses, showing they remained in effect post‑termination.
The expense reimbursement section did not have such a clause.

Courts read that contrast as intentional: obligations with survival clauses continue; those without usually do not.

4. Summary Orders and Precedential Effect

The Second Circuit labeled its decision a “SUMMARY ORDER” and explicitly noted:

Such orders “do not have precedential effect.”
They may be cited under Federal Rule of Appellate Procedure 32.1 and Local Rule 32.1.1, but they are not binding in the way a published opinion is.

Even so, summary orders are often persuasive, especially where they synthesize and apply existing binding precedents—as Davis does.

VII. Impact and Practical Implications

A. For Contract Drafters and Transactional Lawyers

Termination rights will be enforced as written
When contracts unambiguously allow removal or termination “at any time,” New York courts will not graft on good‑faith limitations to preserve contingent compensation. If you want protection against opportunistic removal, you must:
- Include vesting provisions for contingent fees (e.g., bonus payable if the triggering event occurs within X months of termination or if negotiations substantially completed), or
- Expressly limit the counterparty’s right to terminate (e.g., “only for cause” or “may not terminate for the purpose of avoiding payment”).
Be explicit about survival of expense and fee obligations
The contrast between sections with survival clauses and section five without one underscores the importance of:
- Clearly stating which obligations survive termination, and
- Understanding that silence will usually be read to mean non‑survival if the agreement itself ends upon termination.
Recognize allocation of risk in contingent arrangements
Engagements that compensate a representative via a contingent fee tied to future transactions inherently involve the risk of pre‑event termination. If the contract gives broad termination rights and does not protect the fee, the representative is assuming that risk.

B. For Litigators and Claimants in Similar Situations

Pleading around clear contract language is difficult
Under Twombly/Iqbal, a complaint must allege a plausible breach of a contractual duty. Where the contract unambiguously authorizes the challenged conduct, courts are inclined to dismiss at the pleadings stage, particularly in sophisticated, heavily negotiated agreements.
Tortious interference cannot substitute for a weak contract claim
If the underlying contract allows the challenged termination, there is no breach and thus no tortious interference. Plaintiffs cannot use tort theories to expand their contractual rights beyond the written terms.
Good‑faith claims are limited by express drafting
Courts will not transform at‑will or “any time” rights into more protective arrangements through the implied covenant. Litigators should focus on:
- Identifying genuine gaps or ambiguity in the contract, and
- Demonstrating that the defendant’s conduct exploited those gaps contrary to the parties’ reasonable expectations.

C. For Investors and Noteholders

The case implicitly confirms that where investors act within the scope of clearly drafted rights (such as the right to replace a representative), their actions are generally insulated from tort liability based on the consequences of exercising those rights—even if one anticipated consequence is the avoidance of a contingent payment.

That said, the decision does not purport to immunize:

Conduct that falls outside the contract’s bounds, or
Truly independently wrongful means (e.g., fraud) that might give rise to other claims.

D. Doctrinal Clarification, Though Non‑Precedential

While the order expressly lacks precedential effect, it is doctrinally significant in that it:

Reaffirms the primacy of text in New York contract law.
Illustrates how New York courts treat the implied covenant as a narrow, non‑contradictory supplement to written terms.
Demonstrates a strictly contract‑centered approach to tortious interference, with real consequences at the Rule 12(b)(6) stage.

District courts and practitioners in the Second Circuit will likely treat Davis as a useful, persuasive application of long‑standing principles to modern, cross‑border financing engagements.

VIII. Conclusion

Davis v. ODN I GmbH provides a clear and rigorous application of New York contract and tort principles to a sophisticated financial engagement. The Second Circuit:

Refused to use the implied covenant of good faith and fair dealing to limit an express “at any time” removal right.
Confirmed that tortious interference with contract requires an actual breach of the underlying agreement, which cannot exist where the contract expressly authorizes the disputed conduct and precludes the claimed compensation.
Emphasized the importance of precise drafting around survival clauses, holding that reimbursement obligations did not extend past the date the agreement ceased to be effective.

In the broader legal context, Davis is a reminder that New York courts will enforce the bargain as written, particularly in sophisticated commercial settings. Participants in complex financings—whether issuers, investors, or representatives—should expect courts to honor clear risk allocations, including the risk that a representative may be removed just before a lucrative event, unless the contract plainly says otherwise.