Page 37 - Acertaining Economic Damages Calculation

If plaintiff is unable to establish evidence of costs it would have been obligated to pay in a "but
for" world, the court will not be able to assess plaintiff's damages award.

In analyzing the detailed list of avoided costs and expenses, the Court of Federal Claims explained that
in order to establish the but-for world, Englewood must provide reliable records to substantiate its
avoided costs and expenses:

[T]o establish a "but-for" world of avoided costs, plaintiff must provide proof that Englewood ei-
ther paid the expenses itself, or made payments to [the] Mortgage [company]. Although plaintiff
has presented records of expenses in the form of Englewood’s general ledgers, there are no en-
tries or other reliable documents indicating that Englewood made payments to [the] Mortgage
[company]. fn 16

Such evidence of payments may have indicated that these expenses were not avoided. Thus, the court
was left with defendant’s claim that a total of $4.299 million in "avoided" expenses were actually paid
by a third party — a level of expenses that exceeded the lost gross revenue calculation from which the
Court of Federal Claims was instructed on remand to deduct the operational costs or expenses Eng-
lewood did not pay but would have been obligated to pay.

In conclusion, the court noted that it had provided the plaintiff with numerous opportunities to provide
adequate records to the court to prove the avoided costs and its net lost profits with reasonable certainty:

As noted in a number of decisions issued by this court regarding plaintiff's case, this court af-
firmatively believes HUD was in the wrong when it breached the HAP contract and agrees with
plaintiff that it continued to incur certain expenses. Nonetheless, plaintiff's repeated failure to
keep, locate, and submit to the court adequate records has been a consistent problem throughout
the above-captioned case, despite numerous opportunities accorded to plaintiff to identify and of-
fer specific documentation, including now on remand. fn 17

The Court of Federal Claims continued:

In reviewing the record as a whole, this court, cannot determine which, if any, were costs not
avoided by the breach. The record is replete with documents demonstrating payments made, as a
result of funds advanced by Reilly Mortgage [(a 3rd party)] or the Illinois Housing Department
Authority, but not by plaintiff. In furnishing incomplete records of its own payments, the plain-
tiff has placed itself in a position to receive no award at all. The documents produced at trial and
the numerous documents submitted on remand do not meet plaintiff's burden. fn 18

Due to plaintiff’s failure to provide the necessary information and proof regarding both its alleged pay-
ments and costs, the court reduced damages to $0, despite the court’s acknowledgment that HUD
breached the contract with plaintiff.

fn 16 Id. at 735.

fn 17 Id. at 737.

fn 18 Id. at 740.

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