Page 36 - Acertaining Economic Damages Calculation

extra expenses it incurred caused by the breach [losses caused], less savings resulting from the
breach.’ (brackets in original). fn 12

Defendant submitted a "proposed list of avoided costs and expenses," including debt service, balloon
payment on the debt, loan debt, major repairs to the apartment building, other routine operating expenses
at the apartment building, real estate taxes, insurance payments, mortgage interest payments for interest
during construction and principal, and interest payments post-construction. At a special hearing regard-
ing the appropriate deductions, plaintiff adopted the list submitted by defendant.

In analyzing the issue further, the Court of Federal of Claims cited to the Federal Circuit’s discussion in
Anchor Savings Bank, FSB v. United States, 597 F.3d 1356 (Fed. Cir. 2010), regarding the prerequisites
for recovering lost profits. That court in Anchor Savings Bank, FSB stated the following:

To recover lost profits for breach of contract, the plaintiff must establish by a preponderance of
the evidence that (1) the lost profits were reasonably foreseeable or actually foreseen by the
breaching party at the time of contracting; (2) the loss of profits was caused by the breach; and
(3) the amount of the lost profits has been established with reasonable certainty. fn 13 [citations
omitted]

The Court of Federal Claims then noted the following:

Avoided costs and expenses are part of the ‘but-for’ world of lost profits, which plaintiff must
establish with reasonable certainty. See S. Nuclear Operating Co. v. United States, 637 F.3d
1297, 1304 (Fed. Cir. 2011) (Noting that the burden to establish a but-for world, ‘with respect to
both claimed costs and avoided costs, plaintiffs bear the burden of persuasion,’ and ‘this burden
extends to avoided costs . . . .’). fn 14

The Court of Federal Claims also reiterated that the costs that the plaintiff was legally obligated to pay
irrespective of the contract breach were not saved or avoided and would not need to be deducted. The
court further explained that in establishing any avoided costs, the plaintiff is in the best position to de-
termine the costs it would have incurred and avoided, while pointing out a defendant’s role in establish-
ing the avoided costs, consistent with HUD’s role in this case.

[P]laintiffs are in the best position to determine both the costs they would have incurred and the
costs they would have avoided, although a defendant may be called upon to point[] out the costs
it believes the plaintiff avoided because of its breach. fn 15 [citation omitted]

The Court of Federal Claims emphasized that damages could not be awarded if the plaintiff was unable
to provide evidentiary support to establish a plausible but-for world:

fn 12 Id. Although additional expenses incurred may be a proper component of a damages calculation, the Court of Federal Claims
ruled that the mandate from the Court of Appeals for the Federal Circuit in this case did "not extend to a reassessment of the damages
as a whole." Id. Thus, any claims as to additional expenses Englewood suffered were not addressed on remand.

fn 13 Id. at 730.

fn 14 Id. at 731.

fn 15 Id. at 732.

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