Opinion ID: 211884
Heading Depth: 3
Heading Rank: 6

Heading: Offset by financial benefits

Text: 47 Damages based on the injured party's reliance interest may be reduced by any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed. Restatement (Second) of Contracts § 349. Further, the defendant may be credited with any benefit the plaintiff retained from its expenditure in reliance of the breached agreement. Dan B. Dobbs, Law of Remedies, § 12.3(1) at 51-52 (2d ed. 1993). Here, the government argues that the assistance payments it made should offset any reliance costs incurred by Westfed. According to the government, it committed only a partial breach and that it is entitled to a dollar-for-dollar credit of its partial performance from the assistance payments it made. Thus, because the government paid about $780 million, which exceeds the amount awarded in reliance costs, the government suggests it owes Westfed nothing for its breach. 48 The trial court determined that the government seized New Western before Westfed had the opportunity sell the company or to recoup its losses, and that the government failed to prove with reasonable certainty that Westfed would have incurred the losses it sustained absent the breach. Westfed II, 55 Fed.Cl. at 560. Westfed notes, in addition, that the payments were made to New Western, which the government seized. Thus, whatever value the government put into assets held by Westfed, it was taken when the government seized New Western. Further, by 1989, the government barred Western from paying any dividends to Westfed, preventing Westfed from tapping into the benefit arising from the payments by the government. Most importantly, Westfed notes that it was the government's burden to prove with reasonable certainty the amount of offsetting benefit retained by Westfed, which, in the trial court's opinion, the government failed to do. Westfed II, 55 Fed.Cl. at 560; see Restatement (Second) of Contracts § 349 (placing burden on breaching party to prove the amount by which the reliance damages award should be reduced). 49 The government articulates no persuasive rationale, much less cites any legal authority, for its assertion that it is the aggrieved party, not the breaching party, that bears the burden of proving the value . . . of [the breaching party's] undisputed performance. If the government wanted an offset, it was the government's burden to prove with reasonable certainty the quantum of benefit retained by Westfed despite the government's breach. According to the government, Westfed received the benefit of the use of the Government's assistance payments for its own purposes during the five-year period that Westfed owned and operated Western. In particular, the government highlights the assistance payments and other reimbursements it made to New Western. The government provides no analysis, however, of how its expenditures translate into any retained quantifiable benefit by Westfed. Instead, the government relies on largely conclusory claims that its entire expenditure should be effectively treated as a benefit retained by Westfed. The government ignores the fact that it put most of its money into New Western, which it eventually seized from Westfed, and that it prevented Westfed from reaping any dividends from New Western during most of the period that Westfed held New Western. Stripped of New Western and the opportunity for benefits that Westfed hoped to achieve under the agreed upon RCMA, the government cannot, based on the evidence and arguments presented, claim its breach on the whole was harmless. We find no clear error in the trial court's factual determination that the government failed to sustain its burden in showing that any offset from the damage award is appropriate.