contract with central similar keen water conservation district for the delivery of certain quantities of water under water supply contract central is a california state agency established for the purpose of protecting and restoring the said marking aco for by providing a surface water supply that will make it possible for farmers to convert from the use of underground deciding damages strayed into and confused its role so that it dealt with liability issues that had already been decided by this court in fact decided those liability issues in a manner contrary to the way in which this court had decided them and finally the court applied a standard evidence that far exceeds the preponderance of the evidence standard that applies in the proof of the causation in the damages fortunately however the trial courts did just that and perhaps the possibility of a reversal in this case provide this court with a punitive damages calculation such that it is possible for this court to determine the actual damages that are due central for expect to see and to instruct the trial court then to enter a judgment in favor of central for those expectancy damages together of course with the cost of cover damages work it was a good sentence because as i looked at the briefing that and it did not appear to me to be the case that the issue of what exactly constitutes the underlying research was litigated what was litigated was a whole set of defenses so i will go back to the language of the contract which doesn't say the liver it says make available and i understand how reclamation said we won't actually make available fifty six thousand plus whatever stockton was guaranteed that that was a  ach but if that was a breach then why isn't the question the question that the court of federal claims asked how much water would you actually have taken if analysis of article three taken together particularly with article five of the contract which constitute as this court indicated a take or pay provision up to the bridge years that was not particularly important because there was a build up through the first ten years of the contract the first breach year happen to be year eleven of the contract which was nine hundred ninety nine and in that year the contract minimum take or pay provision kicks in force such that central was obligated to pay for and reclamation was obligated to provide a minimum of fifty six thousand a  feet that's how the current that and that is how this court as i understand is how this court got to the conclusion that the failure to deliver that fifty six thousand acre feet was a br i suppose it is theoretically possible that central would pay for the water and unsafe don't deliver it but that would be folly in a world in which this water is extremely valuable as the trial co government says a number of times in its brief and i didn't see a response to this in your reply brief that in the year two thousand and eight year two thousand and two than those two years not other years forget about the other years that central actually did not take as much as was allocated and if that's true why isn't that an awfully powerful bit of evidence for the court of federal what we have some additional water and that ninety thousand by the way europe was not just for central as the government's brief suggests it's shown if the only evidence we have this is shown in a press release which is the central issue in central's case the question is is he right we know that the current track is written to say that the water in the original opinion of this court on the liability issue and then we're from that are we hearing generally we made a statement about that at picking up in fact on what the trial court itself had said originally as to what the contract required and the trial court in its most recent opinion says this court previously found that article three not only obligated reclamation to provide the minimum amount of water listed in the build up schedule but also required each district purchase such amounts of water citing to itself the federal circuit affirmed that fighting that finding citing to our stop first stock opinion as i read that we picking up on the trial court's contract interpretation held that it was as a trial court indicates in the heading t discussion here this was a take of a provision which is interesting because that is not exactly what the contract said but it was an interpretation  contract by the trial court in its original live below the decision and an interpretation we specifically affirm so the question it seems to me at this point is w victor on both courts part and not binding and therefore is an open question at this point in working out the damages or is that law case  finding in effect that the government was obligated to provide that just assent was obligated to take that and what's  issue is a breach of the contract not what actually transpired the turn in fact was found to be breached and so the only question before us is the proper measure of damages as it lays the trial court or is that question still an open question let me go a step further and point out that later in the trial court's opinion  mrs j a twenty three at the back of a very brief the trial court said the court finds that while article three is a take or pay provision the evidence establishes that the provision would not have been in force absent reclamation breach so that really gets to the heart of i think what judge toronto zeroed in on right at the beginning does this case damages concept that arises in the time text for example of a contract for resale of goods is that the property measure you you raised expectancy damages i'm not sure that expectancy them is really the label of wrestling with one way to look at it is it's a contract for resale of goods in which case the breaching party oh who's the difference between a court seems to think that this goes back to the original contract language that the government was only obligated to make it available and that really depends on the first trial in the first appeal the trial court found to be and i think this court accepted that because of the way this contract it operated with reclamation announcing in advance what they wouldn't wouldn't  supply in terms of water that there was no request process now if there's no request process then how do you measure whether in the so called breach years reclamation breached the contract well wait a minute if there is all due respect that issue is dealt with by the trial court and by us here earlier then you know and again in this opinion by the trial court we all agreed that the failure to make the request was not a defense to the breach of the contract exact so that issue's not really before so the person gets to the question was what is the breach what what was that what was it  minimum that reclamation was required to make available and that says what was required to pay for that was before that there was an eighty thousand acre ford maximum which had been putting that aside is any of that relevant to the question of the measure of damages for the breach and is a breach of breach of contract or is a breach of the breach of performance of it is that breach against which damages should be measured but i don't read this court's opinion to have said that or the trial court's opinion for what but whatever it may have been in breach we we have the record  as well as their position that there was a loss on every record for that water that was taken and with a hint which is securely developed on this appeal other than to cast doubt on the broad generalization that expectancy the average is the the measure is your position that none of that really is relevant no my position on the first issue your honor is there's not a scintilla of evidence to support the notion that if reclamation had made available the fifty six thousand acre feet it wouldn't have trudged central for that amount essentially said no we don't want to add that never happened we don't have any there was no testimony there's no correspondence all what the government relies on is they said well we never charged you for fifty six thousand  focusing on two thousand u s d did take less than a net made available to they charge you for what they made available or only for what you took up in each year they only build for the water that was delivered but i again remind at it what they're referencing is some charts were tables that were were put together by some parties but there is no testimony to support that the only testimony is mr roberts testimony where he explains what i indicated not the verbiage in this contract because the very beach and contract got construed and your honor the construction of that drug use is consistent in our view with the plain language of that purpose if you look at amount of the amount of water to be made available annually from the new loan contract later it said article three also establishes for each year of the contract a minimum amount of water that reclamation  which page number is further in the opinion that opinion says the record establishes in the trial court found as a fact that reclamation failed to provide the water that was promise directly years ninety nine or ninety five and ninety nine to twenty four the years it issued in this appeal absent an affirmative defense that failure by the government would constitute a breach of the misunderstanding by the trial or as to what article three obligated the government to do and perhaps we erroneous lee went along with the trial court but that's not at some point become law what it sort of then i don't know but at that point it was widely understood and agreed it was a promise to deliver fifty six thousand acre feet that didn't happen well but the reason i say the distinction between making available and delivery doesn't make sense is because of the time of delivery for a district that is hoping to provide waters to farmers for irrigation the timing of that makes sense and so reclamation  have this amount of water available to you this year central had come back and say we want this much in april this month in may this month in june for poor irrigation there had to be that sort of cord nation between reclamation and central question to the question of breach yes but now we're dealing with the question of damages and so what happens does it have the timing of things what happens does have a question on the facts on damages and let me explain why i imagine that reclamation said we're required to deliver fifty six thousand acre feet of water and we're going to give it to you in april ok simple as and said when they wanted to deliver they say we'll give it to you in april we're looking at the world in which things went the way they were supposed to go and in that no breach world reclamation says we have this volume of water available and someone tells reclamation when they want to water available now the question then becomes what happens to that water flow and that's very important and that's where we make our point about the demand of district farmers that central has failed to show a demand on the part of its district farmers for fifty six thousand acre value of water but that's not the government's problem central problem then they end up with fifty six thousand acre feet in which they're drought and they wish they had it now in which they're drowning with fifty six thousand  they have no market but a huge company that ordered the ten thousand pairs of who she retailer and discovers that everybody is now wearing boots by the time the shoes show lapses and that's dollars for just a small amount of water that central had the by the then a miss what did you all discuss anything in the to anyone or any other damages measure our farmers would have used twenty thousand acre feet of water each year it did now it's important to recognize what really happened on the ground here in these years and in the years before and after this for each when we are analyzing damages charged for seventeen thousand acre feet in that year not the larger volume that was made available and such was partners used about twelve thousand acre feet of water not the fifty six thousand that they base their damages modeled on in two thousand the decisions show what documents introduced into evidence at the trial show was that there was an allocation of ninety thousand acre feet that year that was a joint allocation to both central and stockton east but f that ninety thousand a feat that was allocated not all of that was taken and used and i would add simple with only charge through the amount of water that was actually delivered to it and it wasn't the larger amount that was made available that it could have had with the actual amount delivered to clarify and quickly the two thousand two situation gladly in two thousand and two it was another water shortage year and what sense would did was they went out and they've entered into a contract with another local irrigation district sent the south san joaquin or a day for gauging the script that contract allowed them to require them to purchased the fifteen thousand acre feet allowed them to purchase up to thirty thousand acre feet in fact they chose to purchase twenty thousand acres so there were still ten thousand acre feet on the table but they had an option to purchase from south san juan and i doubt this is the very same water comes from the same to dam it flows through the same delivery system so there's no distinction in the water at all corner federal claims agreed with their expert that there was a spot market with some prices painterly higher than what they would have had to pay or nice profit it's because water is not like stronger it's not something that's fungible that you can just sell anywhere here you've got water does available from any particular dam and there are only a few irrigation districts that could conceivably buy and use that water those irrigation districts in the years we're talking about didn't have an interest in buying or using that water from the from separate it's central to the general counsel testified that central would not of salt water in the breach two years had it received the full outpatient he also testified at trial that they would have but the judge made a credibility determination that that was not that change testimony was not credible it's worth looking at what central did in two years where it had additional water before and after that we changed double check this is yesterday when in your description in the last few sentences of evidence are you taking issue with any findings made by the court of federal claims on this water sales and its water sale section or whether the the only issue that i take with what the court of federal things did your honor is there what is the fact that this water sale could have taken place with the consent consistent with the contract the contract here specifically said that central cannot resell water without reclamation express written consent and you know it's not a resale time but your point that there are good reasons why even if central could have it would not have it would not have and it would not have it would not have chosen to because what we see in years where there was additional water for instance two thousand where there's additional water it didn't make any sales in one thousand nine hundred sixty in two thousand and five two thousand and six these are not rich years but there was excess water in those years central did not attempt to sell and did not sell any water to anyone outside the district and coupled with that there were limitations in the bureau of reclamation its own regulations about when it would permit a sale as i said the contract itself says that central cannot resell this water without reclamation of expressed written  greater conduct in the how it handles its water sales i agree one hundred duck but in our view their actual conduct is the best evidence in showing what they would in fact have done because here they had connection i want to be clear the government did reach the contract when it didn't make the requisite volume of water available but up imagine a situation where centrals farmers didn't need the water and we've shown that they didn't need anywhere near the volume that simple questions and it had no resale options now it's important to know that simple doesn't say how much would have on the farmers or how much would have gone in this resell market the price of goods sold to its farmers was between ten and twenty seven dollars breaker foot so there would have been additional sales to district farmers as simple contends the spot market prices are not the right price usually in calculating damages let me take you back to yes a little bit of history in this disease historical record shows that the government would not have been allowed to operate this day and and to run the whole operation by the state of california but for the fact that the government agreed to show that it would sell every year and had purchases every year for the amount of water that the government was claiming would be irrigated the water would be created by the melanie's dam if you go back in history there was a requirement from the state of california that the government show the state of california that it had purchasers for that fifty six thousand acre feet you're on the government the government made that representation to the state of california in order to run this whole operation under the reclamation program you're saying that that representation was not binding on the go that representation is not evidence that in fact the court found that that was not appropriate evidence used to figure out what the actual demand was twenty years later those were estimates there were esther it's not ok those were estimates that were made in one thousand nine hundred three or thereabouts when the whole process the whole system was being set up it's what was believed in one thousand eighty three but we're talking about twenty or more years later and what actually happened and the evidence about what  the contract was i'm basically your decision well first of all the course of conduct sort of evidence is certainly admissible fought for that sort of thing and that and that is part of what we're saying for instance on the take  issue that you alluded to the evidence showed that in the years before in the years during the breach and in the years after the bridge reclamation did not in force that take or pa it was uniform across the board and i use take a pay loosely i'm not trying to change the contract language by using that that short and so certainly those sorts of things are relevant but more importantly is the fundamental question it's a it's at bottom of causation question because the comparison between a breach and a no breach world is one in determining causation and whether damages were actually caused by a bridge an admitted which whether damages flowed from that that's that's the test or affected the damages and that is what the court rejected and that is what central has requested in their briefs and that is that is why we have responded to that ar t but because in the no breach world if you look fairly at that no breach world central farmers did not have an appetite for the volume of water central was able to get under this contract not before again this is a not before the breach not during the breach and not after the breach sort of thing because in two thousand and six and two thousand and ten reclamation didn't allocate the full amount to both but stockton east and  and in those years central didn't take the full amount didn't paid for the full amount and it's farmers use far less than the fifty six thousand acre feed that central would have its damage is based upon th honor just a couple of points first of all your honor and i want to stress that with respect to the year two thousand the government's contention now that it made available more than fifty six thousand feet if accepted by this court of course means it was introduced in the year two thousand we understood that that issue was resolved in the first appeal and that the government was not now in a position to argue that it didn't in fact and i think the court the trial court established a level of proof that goes with beyond preponderance of the evidence that is the court never really made a finding that central wouldn't have used witnesses the general counsel the chairman of the board both of whom know intimately most of these far farm families many of them are in or married and and it's a very closely knit community they testified that in each of the breach years  that were that this is the kind of study that underlies each and every of the school hours of water supply contracts on which the central valley project is being operated today there are forty year contracts with rights of renewables these studies were not intended to be mere snapshots of a particular point in time if this study is stale and non predictive then so are the reps and there is no basis reclamation to be operating the central valley project today based on these old stale studies that don't tell us anything about water demand whiteboys the engineering firms to gauge to and still design and sized the water delivery system after extensive engineering studies to including community meetings including interviews including letters of intent to deliver eighty thousand acre feet in central anyway was because that engineering firm using its expertise anticipated that there was that demand the government offers this court no reason on the rest of california one third of the agricultural production in california relies on the surface water from the central valley project but for some reason this little water conservation district tucked away in a corner of san joaquin county didn't have demand for that water the trial court listed over a dozen cases in which central valley farmers such as these farmers have brought suit to get water after you told everybody you're only going to get thirty three thousand acre feet from reclamation what they've been doing for ten years now you've got to prove to me that if reclamation hadn't made that announcement that you farmers could have taken more water how do you prove that that's an impossible burden we did prove we did good on oral testimony we did put on the studies we showed what else is happening with every other farm community in california court had to make a determination based on preponderance of the evidence the only witnesses the government put on was a mr shaw rudy an engineer whose testimony who said well he thought farmers didn't like surface water as much  as ground water and the court said that testimony is not helpful it's not going to figure into my determination that if that's the only evidence on the other side of the scale you're wrong the vast preponderance of evidence is that the farmers would have used it absolutely your honor that that bad evidence she didn't find it lacked credibility she didn't find it unconvincing she didn't find it inadmissible or anything else she just said well i don't think that's enough under  infrastructure that was needed to transport the water or was that not an issue we did we did not your honor we thought that was too complicated we saw this is as a sale of goods a contract and that the damages are simply assessed on a per acre foot basis