Opinion ID: 219634
Heading Depth: 1
Heading Rank: 7

Heading: Investment in PFS is Recoverable Only to the Extent It Was for Mitigation

Text: The government's second argument fares better. It argues that Dairyland's investment in PFS was more profit speculation than mitigation, and so should not be recoverable as a matter of law. The government points out that PFS was conceived as a for-profit venture (though it has yet to actually turn a profit). It notes that Dairyland stands to profit if and when PFS becomes commercially successful. And it argues that the size of Dairyland's investment in PFS far outstrips Dairyland's actual need for off-site interim storage. As already discussed, Dairyland has 38 metric tons of SNF to store. The government cites testimony that, using standard storage casks of the type it expects PFS will use, this would require six casks. By contrast, the government argues that PFS's interim storage facility, when built, will have a storage capacity of 4,000 casks. Appellee Br. 33-34. The government points to trial testimony that Dairyland was a 13.5% owner in PFS. From this, the government reasons that Dairyland had proportional ownership of 13.5% of PFS's expected 4,000 storage casks, about 540 total casks. The government points out that this amount of storage dramatically exceeds Dairyland's storage requirements. From this, the government argues that the investment in PFS is not recoverable or, if it were, the trial court should have either performed an accounting of the value of Dairyland's PFS stake or ordered disgorgement of the shares to avoid unjust enrichment. The government further notes that this court has previously held a nuclear utility's investment in PFS to be nonrecoverable as speculative and unforeseeable. Ind. Mich. Power Co. v. United States, 422 F.3d 1369, 1376 (Fed.Cir.2005). Dairyland opposes, arguing first that Indiana Michigan should be limited to its facts. It argues that the evidence here demonstrates, and the trial court held, that it was both reasonable and foreseeable for Dairyland to collaborate with other nuclear utilities to reduce the overall cost of interim off-site storage. In that light, Dairyland argues that the exact manner of the collaborationin this case, equity participation in PFSis not required to be foreseeable. Dairyland further argues that the ownership structure and division of revenue in PFS is more complex than the government's arithmetic suggests. Finally, Dairyland notes that PFS's facility has not yet been built, nor has it ever turned a profit. The government is correct that expectation damages are available to compensate a plaintiff for the cost of actions taken in mitigation, and not for speculative ventures. This is an extension of the requirement that damages are recoverable only to the extent the nonbreaching party can show that the damages were actually caused by the breach. Ind. Mich. Power, 422 F.3d at 1376; see also Energy Nw., 641 F.3d at 1306-07; S. Nuclear, 637 F.3d at 1304. While we decline to enter into fact-finding, we agree with the government that the facts of this case urge caution. The government having raised the specter of a bounty accruing to Dairyland from its PFS investment, Dairyland had the burden to prove how much, if any, of its PFS investment was speculative as opposed to mitigation-oriented. The government, of course, was entitled to contest that proof, and the trial court to determine which party the evidence best favored. Faced with these arguments, the Court of Federal Claims concluded that it was not required to apply this level of detailed inquiry to the causation analysis. Trial Op., 90 Fed.Cl. at 651. We disagree as a matter of law and so vacate the award of damages for the PFS investment and remand for further development. In so doing, we emphasize that we draw no conclusions as to the ultimate outcome of the trial court's inquiry. It is that court's role, not ours, to determine in the first instance the amount to offset Dairyland's award of its PFS investment to account for speculation (if indeed there was speculation). [6]