Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-05045/USCOURTS-ca13-14-05045-0/pdf.json

Parties Involved:
Englewood Terrace Limited Partnership
Appellant
United States
Appellee

Document Text:

NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

ENGLEWOOD TERRACE LIMITED 

PARTNERSHIP, A MICHIGAN LIMITED 

PARTNERSHIP,

Plaintiff-Appellant

v.

UNITED STATES,

Defendant-Appellee

______________________ 

2014-5045

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 1:03-cv-02209-MBH, Judge Marian Blank 

Horn.

______________________ 

Decided: October 29, 2015

______________________ 

DREW G.A. PEEL, Rachlis Duff Adler Peel & Kaplan 

LLC, Chicago, IL, argued for plaintiff-appellant. Also 

represented by DON SAMUELSON, Law Offices of Don S. 

Samuelson, Lake Forest, IL. 

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2 ENGLEWOOD TERRACE LIMITED v. US

DOUGLAS K. MICKLE, Commercial Litigation Branch, 

Civil Division, United States Department of Justice, 

Washington, DC, argued for defendant-appellee. Also 

represented by STUART F. DELERY, ROBERT E. KIRSCHMAN,

JR., KENNETH M. DINTZER; LORRAINE C. SHOTO, GREGORY 

G. GUSTIN, MARIA T. BAGUIO, United States Department 

of Housing and Urban Development, Chicago, IL.

______________________ 

Before DYK, MOORE, and WALLACH, Circuit Judges.

DYK, Circuit Judge.

This case is a breach of contract action brought by

Englewood Terrace Limited Partnership (“Englewood”)

against the United States. In 2012, we held that the 

United States was liable for breach but remanded with 

instructions to determine Englewood’s damages, including 

measuring and deducting from Englewood’s lost revenues 

any costs or expenses it saved as a result of the breach. 

Englewood Terrace Ltd. P’ship v. United States (Englewood VII), 479 F. App’x 969, 973-74 (Fed. Cir. 2012). On 

remand, the Court of Federal Claims (“Claims Court”)

found that Englewood failed to produce sufficient evidence 

to enable determination of saved costs and expenses and 

held that Englewood was not entitled to any damages. 

Englewood Terrace Ltd. P’ship v. United States (Englewood VIII), 113 Fed. Cl. 718, 740-41 (2013). We affirm. 

BACKGROUND

In 2000 Englewood and the United States Department of Housing and Urban Development (“HUD”) executed a housing assistance payment (“HAP”) contract 

providing rent subsidy payments to Englewood on behalf 

of its tenants in South Pointe Towers (“South Pointe”), an 

apartment building in Chicago, Illinois. Englewood VII, 

479 F. App’x at 970. Englewood sued in the Claims Court

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ENGLEWOOD TERRACE LIMITED v. US 3

for breach of this contract, and the Claims Court awarded 

damages in the amount of lost revenues, i.e., the rent 

subsidy payments that Englewood would have received 

under the contract. Englewood Terrace Ltd. P’ship v. 

United States (Englewood II), 79 Fed. Cl. 516, 551 (2007); 

Englewood Terrace Ltd. P’ship v. United States (Englewood V), 94 Fed. Cl. 116, 130 (2010). On appeal, we 

affirmed the Claims Court’s determination that HUD had 

breached the HAP contract and that Englewood lost 

rental revenues of $3,272,217 as a result. Englewood VII, 

479 F. App’x at 972. However, we vacated the damages 

award. The Claims Court had awarded Englewood lost 

rental revenues without deducting costs and expenses 

Englewood saved—i.e., avoided paying—as a consequence 

of HUD’s breach. We remanded to the Claims Court with 

instructions to determine Englewood’s saved costs and 

expenses, deduct them from the lost revenues, and determine whether there were lost profits and, if so, their 

amount. 

On remand, the Claims Court ordered the parties to 

identify saved expenses and costs. The government 

presented such a list, relying on Englewood’s own financial records, which included major repairs totaling 

$3,514,568 and “other routine operating expenses” in the 

amount of $1,830,993, and argued that these expenses 

and costs should be deducted from revenues, with the 

result that there were no lost profits. 

Englewood had not generated evidence concerning 

saved expenses in the original Claims Court proceedings, 

before the first appeal. On remand, though agreeing that 

repairs and operating costs were relevant categories of

potentially saved expenses, Englewood declined to generate and present its own list of what it claimed were saved

costs or expenses. Nonetheless, on November 20, 2012, 

the Claims Court reopened the record and gave Englewood another opportunity to produce necessary eviCase: 14-5045 Document: 59-2 Page: 3 Filed: 10/29/2015
4 ENGLEWOOD TERRACE LIMITED v. US

dence. Englewood submitted additional documents in 

early 2013 to supplement the record. 

The Claims Court found Englewood’s evidence insufficient to determine its saved expenses. “In reviewing the 

record as a whole, this court[] cannot determine which, if 

any, were costs not avoided by the breach.” Englewood 

VIII, 113 Fed. Cl. at 740. The Claims Court noted that

Englewood’s primary evidence of payment consisted of 

summary entries from its general ledgers. The Claims 

Court found the ledgers inadequate to establish that

Englewood had made any payments of expenses during 

the damages period, including any repairs (major or 

minor) to South Pointe or routine operating expenses. 

The Claims Court found Englewood’s additional documentary evidence to be similarly insufficient and held that 

Englewood had failed to prove its avoided costs and 

expenses. Without reaching the question of whether the 

government’s saved costs figures were correct, the Claims 

Court reduced the lost profits damages award to zero. 

Englewood appeals. We have jurisdiction under 28 U.S.C. 

§ 1295(a)(3). 

DISCUSSION

We review de novo conclusions of law by the Claims 

Court and review its factual findings for clear error. 

Englewood VII, 479 F. App’x at 972 (citing Bell BCI Co. v. 

United States, 570 F.3d 1337, 1340 (Fed. Cir. 2009)). 

Evidentiary rulings by the Claims Court are reviewed for 

abuse of discretion. Yankee Atomic Elec. Co. v. United 

States, 536 F.3d 1268, 1272 (Fed. Cir. 2008) (citations 

omitted). 

A plaintiff seeking lost profits or expectation damages 

for breach of contract generally bears the burden to prove 

“what might have been.” Glendale Fed. Bank, F.S.B. v. 

United States, 239 F.3d 1374, 1380 (Fed. Cir. 2001). We 

have previously held that, “[t]o recover lost profits for 

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ENGLEWOOD TERRACE LIMITED v. US 5

breach of contract, the plaintiff must establish by a preponderance of the evidence . . . that . . . a sufficient basis 

exists for estimating the amount of lost profits with 

reasonable certainty.” Energy Capital Corp. v. United 

States, 302 F.3d 1314, 1324–25 (Fed. Cir. 2002) (citations 

and internal quotation marks omitted). 

In that connection, “a non-breaching plaintiff bears 

the burden of persuasion to establish both the costs that it 

incurred and the costs that it avoided as a result of a 

breach of contract.” Bos. Edison Co. v. United States, 658 

F.3d 1361, 1369 (Fed. Cir. 2011) (citing S. Nuclear Operating Co. v. United States, 637 F.3d 1297, 1304 (Fed. Cir.

2011)). Typically, the breaching party first prepares a 

“model of the non-breach world.” Bos. Edison Co., 658 

F.3d at 1369–70; see also S. Nuclear Operating Co., 637 

F.3d at 1304; Energy Nw. v. United States, 641 F.3d 1300,

1307–08 (Fed. Cir. 2011). Once the defendant identifies 

expenses and costs that the plaintiff avoided as a result of 

the breach, the plaintiff “must incorporate them into a 

plausible model of the damages that it would have incurred absent the breach,” or else it will fail to prove lost 

profits with sufficient certainty. Bos. Edison Co., 658 

F.3d at 1369. The Claims Court here found that Englewood failed to meet its burden, stating, 

This court has given the plaintiff at least four 

separate opportunities, over many years, to gather 

and submit to the court documentation that would 

establish its claims . . . . [P]laintiff’s recordkeeping, retention, and presentation has been limited, scattered and disorganized, despite the numerous opportunities provided by the court to 

bring plaintiff’s evidence together in a proper evidentiary form for presentation in this court.

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6 ENGLEWOOD TERRACE LIMITED v. US

Englewood VIII, 113 Fed. Cl. at 732. The Claims Court 

concluded that Englewood’s inability to prove its avoided 

costs and expenses precluded it from awarding damages. 

On appeal Englewood does not dispute that it bore the 

burden of proof on saved expenses or that the government 

offered a model of the non-breach world. Rather, Englewood contends that its evidence established that there

were no saved costs, entitling it to recover its lost revenues in their entirety. For simplicity’s sake, we focus on 

the two largest expenses that the government submits

were saved by Englewood as a result of HUD’s breach: 

major repairs of South Pointe and routine operating 

expenses. These savings, allegedly amounting to 

$3,514,568 and $1,830,993, respectively, together far 

exceed Englewood’s lost revenues of $3,272,217. The 

government’s calculations were based on Englewood’s own

financial records and ledgers. 

Although the Claims Court did not decide whether the 

government’s calculations of these savings were correct, it 

held that Englewood had failed to meet its own burden to 

establish the amount (or the absence of) saved expenses. 

“The court agrees with the defendant that ‘Englewood 

offered, at best, inadequate evidence that it paid any of its 

obligations. This fact alone should bar the award of any 

damages.’” Englewood VIII, 113 Fed. Cl. at 740 (emphasis in original). 

Englewood argues on appeal that it provided evidence 

sufficient to prove it paid for major repairs and routine 

operating expenses. As to operating expenses it relies

primarily on entries from its general ledgers. The Claims 

Court concluded that this evidence was inadequate. 

“[Englewood’s] ledgers alone are not sufficient documentation.” Englewood VIII, 113 Fed. Cl. at 737. The Claims 

Court noted that the ledger entries were generated years

after the transactions they purport to record and include 

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ENGLEWOOD TERRACE LIMITED v. US 7

no supporting documentation confirming payment was 

actually made to creditors. Englewood cites Kansas Gas 

& Electric Co. v. United States, 685 F.3d 1361 (Fed. Cir. 

2012), for the general proposition that ledger entries can 

suffice to prove lost profits. Englewood is correct that 

there is no per se rule that lost profits cannot be proved 

with ledger entries. But the Claims Court did not apply 

any per se rule, and, in any event, Kansas Gas is not 

analogous to the present case, as the evidence deemed 

sufficient there included detailed accounting records that 

complied with Federal Energy Regulatory Commission 

regulations. Id. at 1369. By contrast, Englewood has 

produced only post-dated summary ledger entries. We see 

no clear error in the Claims Court’s ruling that the general ledgers here were unreliable. 

In addition to the ledger entries, Englewood presented 

trial exhibits summarizing its finances in 2002, 2003, and 

2004, but the Claims Court dismissed these, noting that 

each exhibit was based on the same general ledgers. The 

Claims Court also reviewed the additional documents

added to the record on remand and concluded that these 

documents “fail to reveal any payments affirmatively 

made by plaintiff.” Englewood VIII, 113 Fed. Cl. at 740. 

Englewood’s ledgers are not corroborated by supporting 

evidence, e.g., receipts or cancelled checks, proving that it 

actually made any payments. Moreover, Englewood 

provided no authenticating testimony with respect to the 

ledgers. 

With respect to repairs, Englewood relies on a certified contractor’s requisition, a summary of construction 

payouts, and contractors’ lien claims. But there was no 

testimony that these documents represented the $3.5 

million in major repairs. Moreover, testimony from 

Englewood’s representative, Donald Samuelson, makes 

clear that repairs paid out of the Reilly loan were not the 

same $3,514,568 in major repairs in the government’s 

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8 ENGLEWOOD TERRACE LIMITED v. US

model. Mr. Samuelson stated, “[t]he reference to the 

major repairs were simply a conversation. It was not a 

legal obligation by Englewood to do anything,” Joint 

Appendix (“J.A.”) 372, “[the $3.5 million in major repairs] 

were never paid,” J.A. 384, and “[the repairs] were not 

made.”1 J.A. 384. 

When the government presented a plausible model of 

saved expenses that included $3,514,568 in major repairs 

to South Pointe, the burden shifted to Englewood to prove 

what repairs it had actually made. The Claims Court 

found that Englewood failed to do so, having offered “no 

evidence or documentation of what repairs were made by 

Englewood during the damages period.” Englewood VIII, 

113 Fed. Cl. at 736. 

With respect to whether Englewood was obligated to 

make the major repairs, at one point Englewood appeared 

to admit that it had such an obligation, see Englewood 

VIII, No. 1:03-cv-02209-MBH, ECF No. 88-16, at 5 (Aug. 

6, 2001 letter from Donald Samuelson), and, in any event, 

it never offered proof that there was no such obligation or 

1 “MR. SAMUELSON: Well, the major repairs that 

he referred to were discussed and outlined in August of 

2001.

THE COURT: But they actually were expended or 

not?

MR. SAMUELSON: No. They never materialized.

THE COURT: Okay. So these dates we’re talking 

about are just for the major repairs?

MR. SAMUELSON: Yes.

THE COURT: Let’s be very precise, please. But they 

were never paid.

MR. SAMUELSON: They were never incurred. They 

were not made, they were not incurred, they were not 

paid.” J.A. 383–84. 

 

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ENGLEWOOD TERRACE LIMITED v. US 9

that the obligation was limited. The Claims Court correctly concluded that, “[i]f 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.” Englewood VIII, 113 Fed. Cl. at 

732 (citing inter alia Kan. Gas, 685 F.3d at 1371; Yankee 

Atomic, 536 F.3d at 1273). 

Despite its explicit concessions that it never paid for 

major repairs, Englewood suggests for the first time at 

oral argument that the $3,514,568 in repairs were encompassed and paid for by Englewood as part of the more 

than $7 million of construction carried out in 2003 and 

2004 and paid out of the Reilly Mortgage loan (a nonrecourse loan insured by HUD that Englewood secured in 

2002 and on which Englewood ultimately defaulted). 

But Englewood’s complete failure to advance that theory 

in the Claims Court constitutes a waiver. Even Englewood’s reply brief fails to raise the theory and instead 

distinguishes costs and expenses paid from the Reilly loan 

from major repairs and routine operating costs, which it 

does not list as coming from the Reilly loan. Reply Brief 

at 8. 

In summary, the Claims Court found that “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 offer specific 

documentation, including now on remand.” Englewood 

VIII, 113 Fed. Cl. at 737. We see no clear error in the

Claims Court’s determination that the fragmentary and

inconsistent evidence provided by Englewood was generally insufficient to prove its costs and expenses. “In furnishing incomplete records of its own payments, the 

plaintiff placed itself in a position to receive no award at 

all.” Id. at 740. Our court has recognized the authority of 

the Claims Court to award zero damages when the nonCase: 14-5045 Document: 59-2 Page: 9 Filed: 10/29/2015
10 ENGLEWOOD TERRACE LIMITED v. US

breaching party fails to prove its lost profits with reasonable certainty.2 Because Englewood failed to prove the 

expenses and costs savings element of its lost profits with 

reasonable certainty, the Claims Court was justified in 

awarding no damages. 

For the foregoing reasons, we affirm the judgment of 

the Court of Federal Claims. 

AFFIRMED

COSTS

Costs to the United States.

2 See, e.g., Kan. Gas, 685 F.3d at 1371 (“Without 

record evidence about the research costs in both worlds, 

the trial court could not perform the necessary comparison between the breach and non-breach worlds and thus 

could not accurately assess the damages. . . . Thus, the 

Court of Federal Claims did not err in disallowing damages . . . .”) (citations omitted); Cal. Fed. Bank v. United 

States, 395 F.3d 1263, 1268 (Fed. Cir. 2005) (“The inability to prove by a preponderance of the evidence that 

profits would have been made but for the breach will 

therefore preclude recovery on a lost profits theory.”);

Energy Nw., 641 F.3d at 1308; Yankee Atomic, 536 F.3d at

1273; Bluebonnet Savings Bank, F.S.B. v. United States, 

266 F.3d 1348, 1358 (Fed. Cir. 2001).

 

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