Opinion ID: 211884
Heading Depth: 3
Heading Rank: 2

Heading: Out-of-pocket expenses to acquire Old Western

Text: 39 The government insists that the trial court erred in awarding Westfed $148 million, which is the total amount Westfed had spent to acquire Old Western's stock. According to the government, Westfed issued subordinated debentures and preferred stock to raise the necessary cash to acquire Old Western, but the securities to this day remain unredeemed or paid off by Westfed. In the government's view, the $148 million Westfed spent is not an out-of-pocket expense, and it is therefore not an actually sustained loss. 40 The underlying principle in reliance damages is that a party who relies on another party's promise made binding through contract is entitled to damages for any losses actually sustained as a result of the breach of that promise. Glendale Fed. Bank, FSB v. United States, 239 F.3d 1374, 1382 (Fed.Cir.2001). As the government acknowledges, Westfed spent the proceeds from its sale of debentures and stock in order to purchase Old Western's stock. Except for the $3.1 million spent in the pre-contract stage, it is clear that the remainder of the expenditure was made in reliance on the terms set forth in the Assistance Agreement that the government breached. See supra Section III.A. It is inconsequential that Westfed chose to borrow the funds from investors to acquire Old Western's shares rather than use its own money. The government cites no legal authority to support distinguishing the losses actually sustained based on whether Westfed used its own funds or the funds of investors to whom it is indebted. Westfed is entitled to that amount it actually expended to acquire Old Western in reliance on the forbearance promise, which the government repudiated. Id.; see also DPJ Co. v. FDIC, 30 F.3d 247, 250 (1st Cir.1994) (reliance damages aim to restore to the claimant what he or she spent before the opportunity was withdrawn.).