Court Opinion

ID: 2689160
Source: CourtListenerOpinion
Date Created: 2014-08-01 16:00:41.238725+00
Date Added: 2024-06-11T12:07:28.726098
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

       STOCKTON EAST WATER DISTRICT,
                  Plaintiff,

                         AND

         CENTRAL SAN JOAQUIN WATER
           CONSERVATION DISTRICT,
               Plaintiff-Appellant,

                         AND

  SAN JOAQUIN COUNTY, STOCKTON CITY, AND
   CALIFORNIA WATER SERVICE COMPANY,
                 Plaintiffs,

                          v.

                  UNITED STATES,
                  Defendant-Appellee.
                ______________________

                      2013-5078
                ______________________

    Appeal from the United States Court of Federal
Claims in No. 04-CV-0541, Judge Christine O.C. Miller.
                 ______________________

               Decided: August 1, 2014
               ______________________
2                        STOCKTON EAST WATER DISTRICT   v. US

    ROGER J. MARZULLA, Marzulla Law, LLC, of Washing-
ton, DC, argued for plaintiff-appellant. With him on the
brief was NANCIE G. MARZULLA.

    DAVID A. HARRINGTON, Senior Trial Counsel, Com-
mercial Litigation Branch, Civil Division, United States
Department of Justice, of Washington, DC, argued for
defendant-appellee. With him on the brief were STUART
F. DELERY, Assistant Attorney General, BRYANT G. SNEE,
Acting Director, and BARBARA E. THOMAS, Trial Attorney.
                  ______________________

    Before NEWMAN, PLAGER, and TARANTO, Circuit Judges.
PLAGER, Circuit Judge.
    This is a breach of contract case against the United
States, on appeal again from the United States Court of
Federal Claims (“trial court”). Appellant Central San
Joaquin Water Conservation District (“Central”) seeks
modification of the trial court’s damages award, made by
the trial court following our earlier remand. Stockton E.
Water Dist. v. United States, 583 F.3d 1344 (Fed. Cir.
2009), reh’g en banc granted in part, aff’d, 638 F.3d 781.
    In 1983, Central entered into a contract with the
United States Bureau of Reclamation (“Reclamation”) for
an appropriation of water from the New Melones Reser-
voir within California’s San Joaquin Valley. 1 Upon

      1 Stockton East Water District (“Stockton East”) al-
so entered into a contract with Reclamation for an appro-
priation of water from the New Melones Reservoir in
1983. Stockton E. Water Dist. v. United States, 109 Fed.
Cl. 460, 464 (2013). Stockton East’s damages trial pro-
ceeded separately and the trial court issued a separate
STOCKTON EAST WATER DISTRICT   v. US                      3

enactment of the Central Valley Project Improvement Act
(“CVPIA”) in 1992, Reclamation made statements indicat-
ing that it would not be able to meet the quantity com-
mitments in its contracts because of other demands for
the water. In 1993, Central sued the United States
(“Government”) for breach of contract in federal district
court, marking the beginning of a lengthy litigation that
remains unresolved.
    Subsequently, the case was transferred to the Court of
Federal Claims for trial. As indicated, we earlier heard
the breach of contract claims on appeal from the trial
court and, determining contrary to the trial court’s view
that breaches had occurred in certain years, we reversed
and remanded the proceedings to the trial court for a
determination of damages. 2 The trial court on remand
awarded Central $149,950.00 in cost of cover damages,
but denied any expectancy damages. Central timely
appeals the denial of expectancy damages.
    We conclude that the trial court erred by not properly
considering the effect of Reclamation’s announced breach-
es on the amount of water that Central may have ex-
pected to need to meet demand. This caused the trial
court to discount Central’s arguments regarding what
would have happened in the non-breach world. Accord-
ingly, we affirm the trial court’s judgment granting cost of
cover damages but vacate the trial court’s judgment
denying expectancy damages, and remand for further
proceedings consistent with this opinion.

opinion regarding Stockton East’s contract damages,
which are not at issue in this appeal. Id. at 465.
    2   Stockton E. Water Dist., 583 F.3d 1344. The tak-
ings issue, which was included in the remand, is not now
before us.
4                       STOCKTON EAST WATER DISTRICT   v. US

                    A. BACKGROUND
     In 1983 Central, along with Stockton East, entered in-
to contracts with Reclamation for an appropriation of
water from the New Melones Reservoir within California’s
San Joaquin Valley. The Central contract was intended,
following a ten-year buildup period, to make available to
Central a maximum of 80,000 acre-feet and a minimum of
56,000 acre-feet of surface water per year from the New
Melones Unit of the Central Valley Project (“CVP”). Joint
Appendix (“JA”) 166-91. The water was to be used to
support agricultural enterprise in the San Joaquin Valley.
Under the contract, Central would submit a schedule each
year indicating the amounts of water required monthly,
with the first schedule to be submitted two months prior
to the initial delivery of water. JA 176 (Article 4(a)).
    As part of its preparations for accepting water from
the New Melones Unit, Central sought to determine the
type and location of distribution facilities it had to con-
struct by ascertaining the amounts of water the area’s
agricultural activities would use in the years ahead.
Central retained international engineering firm CH2M
Hill to assist in this determination. CH2M Hill held
several meetings with the farmers, surveyed their lands,
and obtained letters of intent signed by farmers.
    CH2M Hill concluded that Central would use at least
50,000 acre-feet of New Melones water per year, which,
because of the thirty percent conveyance loss during
transit from the New Melones Dam, required over 70,000
acre-feet per year from the reservoir. JA 1300, 1311.
Based on CH2M Hill’s analysis, Central’s board author-
ized the execution of bonds to build the needed infrastruc-
ture, at a cost of $7.4 million. JA 1312.
    In May 1988, Reclamation announced the initial de-
livery of water. During the period from 1988–1992,
however, no water was delivered to Stockton East and
Central (the “Districts”) because construction of the water
STOCKTON EAST WATER DISTRICT      v. US                   5

conveyance systems was not yet completed. Stockton E.
Water Dist., 109 Fed. Cl. at 472. Then, in 1992, Congress
enacted the CVPIA, which imposed on Reclamation a new
requirement to dedicate annually 800,000 acre-feet of
water from the CVP for fish, wildlife, and habitat restora-
tion needs. Id. at 472 n.11. In the spring of 1993, in a
meeting with the Districts, Reclamation made it clear
that “this prescription [under the CVPIA] would continue
and in only the wettest years might [the Districts] see
some water.” Id. at 472.
    Following this announcement, Central sued for in-
junctive and declaratory relief and damages in the U.S.
District Court for the Eastern District of California. See
Stockton E. Water Dist. v. United States, 101 Fed. Cl. 352,
354 (2011). The case eventually was transferred to the
Court of Federal Claims and a trial on liability was held
in 2006. See Stockton E. Water Dist. v. United States, 75
Fed. Cl. 321, 376 (2007).
                             1.
    Beginning in 1993, the amount of water made availa-
ble to Central (and to Stockton East) by Reclamation
varied significantly. Although in our earlier decision on
appeal we specifically determined that breaches of the
contract occurred in the years 1999 through 2004, a
summary of what occurred prior to those years is helpful
to understand the actions of the parties in the relevant
time frame.
1993
    In 1993, the Districts requested a total of 20,000 acre-
feet, with 10,000 allocated to each district. Stockton E.
Water Dist., 109 Fed. Cl. at 472. Reclamation delivered
no water under the contracts in 1993. Id. at 473.
6                       STOCKTON EAST WATER DISTRICT   v. US

1994
    In 1994, Central requested 25,000 acre-feet of water.
In the meantime, Reclamation announced that it was
forecasting a critically dry year for 1994, with an initial
forecast providing a “zero water supply” for the Districts.
See id. Ultimately, neither Stockton East nor Central
received any water from New Melones in 1994, with
Reclamation invoking the shortage provision of Article 9
of the 1983 contracts. 3 Id.
1995
    Central initially requested 50,000 acre-feet of water in
1995. Id. at 473. In February of 1995, Reclamation
announced that, due to general drought and water level
conditions in the New Melones Reservoir, only a total of
37,000 acre-feet would be made available to the Districts.
Id. After a delay in water delivery, the Districts submit-
ted reduced requests in August 1995, at which time
Central revised its delivery request to 5,000 acre-feet. Id.
Reclamation delivered only 4,564 acre-feet to Central in
1995. Id.
1996
    In 1996 Central requested 40,000 acre-feet. Id. Rec-
lamation announced an allocation of 49,000 acre-feet to
the Districts for 1996 and made available all of the water
Stockton East initially requested for that year (32,400
acre-feet), id., though Stockton East ultimately submitted

    3   The shortage provision of Article 9(a) provides
that the United States shall not be liable “if a shortage
does occur in any year because of drought, or other causes
which . . . are beyond the control of the United States.”
JA 183.
       STOCKTON EAST WATER DISTRICT   v. US                     7

       a revised, lowered request. Reclamation delivered 17,508
       acre-feet to Central in 1996. Id.
       1997–98
           Reclamation, along with the United States Fish and
       Wildlife Service, the Districts, and other interested par-
       ties, undertook negotiation of an Interim Plan of Opera-
       tions (“IPO”), which was completed and agreed to in 1997.
       Id. at 473. The Districts agreed to the terms of the IPO as
       a short-term modification to the 1983 contracts for 1997
       and 1998. Id. The IPO provided a computational mecha-
       nism for allocating water to the Districts based on annual
       storage and inflow forecasts at the New Melones Reser-
       voir. Stockton E. Water Dist., 583 F.3d at 1353. Under
       the IPO, the Districts were allocated a combined total of
       50,000 acre-feet for each of the relevant years, and Rec-
       lamation’s water deliveries complied with the terms of the
       IPO. Stockton E. Water Dist., 109 Fed. Cl. at 473.
       1999–2004
           Even though the IPO was only adopted for use in 1997
       and 1998, Reclamation continued to use the formulas set
       out in the IPO to allocate water to the Districts from 1999
       through 2004. Id. at 473-74. The following table, adapted
       from our 2009 opinion on breach of contract, summarizes
       (in acre-feet) the water requested by the Districts, the
       allocations made by Reclamation using the IPO, and the
       water actually delivered to each district between 1999
       and 2004 (“Table A”):

     Requested Requested Quantity Delivered Delivered
Year by Stock-  by Cen-  of Water to Stock-  to Cen-
      ton East    tral   Allocated ton East    tral

1999      23,000        None          60,000      31,112       33,786
       8                          STOCKTON EAST WATER DISTRICT   v. US

2000        24,000       None              90,000    7,377         27,759

2001        24,000       None              34,000    7,030         25,747

2002         3,500       12,000            15,500    3,493         10,508

             10,000      10,000                      2,210          9,846
           (combined   (combined
2003                                       10,000
           with Cen-   with Stock-
              tral)     ton East)

2004         None        25,000            15,000    1,486         13,605

       See Stockton E. Water Dist., 583 F.3d at 1353.
           In each of these years, the terms of the contract called
       for a minimum allocation of 56,000 acre-feet of water to
       Central alone. Id. at 1352. After it was clear Reclama-
       tion would not meet these allocations, Central purchased
       water from the South San Joaquin Irrigation District
       (“SSJID”), in order to make up for the shortage of water
       from Reclamation in the years 2002 through 2004. See JA
       211; Stockton E. Water Dist., 109 Fed. Cl. at 475.
                                      2.
           The trial court initially awarded judgment for the
       Government on the breach of contract claims for 1993
       through 2004 and dismissed a related takings claim. Id.
       at 476. The trial court subsequently granted in part and
       denied in part the Districts’ motion to alter or amend the
       judgment and denied the Districts’ motion for reconsider-
       ation, prompting the Districts to appeal to this court
       challenging the trial court’s non-liability judgment for
       1994, 1995, and 1999–2004. Id.
           On appeal, we affirmed the trial court’s judgment of
       non-liability as to the Districts’ breach of contract claims
       for 1994 and 1995, reversed the trial court’s judgment of
STOCKTON EAST WATER DISTRICT   v. US                     9

non-liability with regard to the Districts’ breach of con-
tract claims for 1999 through 2004, and vacated the trial
court’s dismissal of the Districts’ takings claim. Stockton
E. Water Dist., 583 F.3d at 1369. We then remanded the
case to the trial court to decide the Districts’ takings
claim 4 and determine damages for the breaches that
occurred from 1999 through 2004. 5
     On remand the trial court found that Central was en-
titled to cost of cover damages in the amount of
$149,950.00, the difference between the total amount
Central paid to SSJID for water and the total amount
Central would have paid to Reclamation for the water in
2002–2004. Stockton E. Water Dist., 109 Fed. Cl. at 483.
The trial court denied Central any expectancy damages,
finding that Central did not set forth persuasive evidence
demonstrating how much New Melones water its farmers
plausibly might have requested in the 1999–2004 non-
breach world, one in which Reclamation made full alloca-
tions under the 1983 contract, and did not present any
credible evidence that it would have made sales of surplus
water if the contractual minimums had been made avail-
able to it. Id. at 492–93.
                     B. DISCUSSION
                 1. Standard of Review
    We review the judgments of the Court of Federal
Claims “to determine if they are incorrect as a matter of
law or premised on clearly erroneous factual determina-

   4    In October 2011, following briefing by the parties,
the trial court granted Appellee’s motion to dismiss Ap-
pellants’ takings claim. Stockton E. Water Dist., 101 Fed.
Cl. at 362.
    5   Further details of the prior proceedings can be
found in Stockton E. Water Dist., 109 Fed. Cl. 460.
10                       STOCKTON EAST WATER DISTRICT     v. US

tions”; we review that court’s legal determinations with-
out deference. Dairyland Power Co-op v. United States,
645 F.3d 1363, 1368–69 (Fed. Cir. 2011) (internal cita-
tions omitted). We review the factual findings of the
Court of Federal Claims for clear error, Indiana Michigan
Power Co. v. United States, 422 F.3d 1369, 1373
(Fed.Cir.2005), including “the general types of damages
awarded . . . , their appropriateness . . . , and rates used to
calculate them . . . ,” Home Savings of America v. United
States, 399 F.3d 1341, 1347 (Fed.Cir.2005). This court
provides the trial court with wide discretion in determin-
ing an appropriate quantum of damages. Hi–Shear Tech.
Corp. v. United States, 356 F.3d 1372, 1382
(Fed.Cir.2004). Interpretation of contracts is a question of
law that we review without deference. Sevenson Envtl.
Servs., Inc. v. Shaw Envtl., Inc., 477 F.3d 1361, 1364–65
(Fed. Cir. 2007).
                         2. Analysis
                   i.   Breach of Contract
     It is clear from the briefs of the parties that there is
still a misunderstanding as to precisely what Reclama-
tion’s breach of contract entailed, a misunderstanding
that may have affected the trial court’s view of the mat-
ter. We first turn to this issue because the nature of
Reclamation’s breach informs the damages analysis.
   The portion of the contract at issue is Article 3(c),
which states:
     The United States shall make available to the
     Contractor the annual quantities of agricultural
     water, up to a maximum quantity of 80,000 acre-
     feet, as specified in the schedule submitted by the
     Contractor in accordance with Article 4 and the
     Contractor shall pay for said water in accordance
     with Article 5: Provided, That the United States
     shall make available and the contractor shall pay
STOCKTON EAST WATER DISTRICT   v. US                     11

   for, as a minimum, such quantities of agricultural
   water specified below:
                            ***
   [F]or years nine and 10 the minimum quantity of
   56,000 acre-feet . . . . Each year beginning in the
   eleventh year and continuing for the remaining
   contract term the quantity of water schedule in
   the eleventh year, which quantity shall be at least
   equal to or greater than the quantity made avail-
   able and paid for in the tenth year . . . .
JA 173–74.
     Central argues that the trial court misinterpreted Ar-
ticle 3(c), reducing its maximum annual delivery require-
ment from 80,000 acre-feet to 56,000 acre-feet and
eliminating the minimum delivery requirement altogeth-
er. Central argues that Reclamation was obligated to
provide, and Central was obligated to pay, for at least
56,000 acre-feet of water per year regardless of whether
Central actually requested that quantity or not. Central
also argues that the trial court improperly read the take-
or-pay requirement entirely out of the contract on the
ground that the Government would not have enforced it
anyway.
    Central further argues that the government and en-
gineering studies, and specifically the CH2M Hill study
commissioned in the early 1990s prior to the filing of this
lawsuit, are relevant to determining expectancy damages.
Central argues that the trial court erred in ignoring this
information, and placing on Central the burden of proving
how much water Central’s farmers would have requested.
    Central relies on our decision in the breach of contract
appeal to support its position that the breach of contract
was Reclamation’s failure to deliver to Central the con-
tract minimum of 56,000 acre-feet of water in each of the
six relevant years, as required by Article 3(c):
12                      STOCKTON EAST WATER DISTRICT    v. US

     There is no denying that the quantities of water
     promised were not delivered, and that therefore a
     breach occurred. This is beyond dispute—the evi-
     dence is conclusive; the trial court so held; and
     this court affirmed that finding.
Stockton E. Water Dist., 638 F.3d at 783 (citing Stockton
E. Water Dist., 583 F.3d at 1370).
       The Government argues that the trial court properly
construed Article 3 of the contract and that Central failed
to cite to any contract provision suggesting that the
contract required Reclamation to “deliver” water irrespec-
tive of Central’s wishes or without a written request that
water be delivered. Further, the Government argues that
it is insufficient for Central to point out that the contract
required Reclamation to make more water available
during the breach years; Central must also present record
evidence establishing what would have happened if
Reclamation had made available the requisite water. The
Government argues that Central confuses the actual
world in which its obligation to submit a water delivery
schedule was excused by Reclamation’s breach, and the
hypothetical no-breach world in which Central would
have requested and received water in accordance with the
schedule it had tendered.
    Although we previously addressed the issue of breach
in our 2009 opinion, the opinion dealt largely with defens-
es to breach of contract rather than extensive discussion
regarding the nature of the breach. See generally Stock-
ton E. Water Dist., 583 F.3d 1344 (2009). However, in the
opinion, we made clear that “the Districts and Reclama-
tion have binding contracts for specified quantities of
water which Reclamation is obligated to provide,” and
that “Reclamation failed to provide those specified quanti-
ties in the years at issue.” Id. at 1369.
   Even so, Central mischaracterizes some of the state-
ments from our 2009 opinion to support its theory that
STOCKTON EAST WATER DISTRICT   v. US                      13

Reclamation’s breach was in its failure to deliver the
minimum quantity of water in each of the breach years,
rather than its failure to make available the minimum
quantity of water. The contract explicitly says that the
burden is to make the water available, not to deliver it:
    “The United States shall make available to the
    Contractor” . . . “which quantity shall be at least
    equal to or greater than the quantity made
    available and paid for in the tenth year”
JA 173–74 (emphasis added).
    Based on the plain language of the contract, discuss-
ing Reclamation’s obligation to “make available” certain
quantities of water, we agree with the way in which the
trial court defined the breach in this case, including its
finding that the “take or pay” provision would not have
been enforced absent Reclamation’s breach. See Stockton
E. Water Dist., 109 Fed. Cl. at 487. The trial court’s error
was not in its interpretation of the breach of contract,
rather, the trial court’s error lies in its analysis of how
expectancy damages are to be analyzed based on the facts
of this case.
                 ii. Expectancy Damages
    A crucial event in this case occurred in 1993 when
Reclamation announced that it would not be able to meet
the minimum allocations provided for in the contract.
This event triggered the Districts to file suit for breach of
contract, the long path to trial resulting in evidence of
breaches of contract in the post-1993 years when Recla-
mation’s non-performance was not excused. In the cir-
cumstances of this case, the question the trial court
should have been examining in determining the “but for”
non-breach world is: what would have happened had
Reclamation not announced in 1993 (and later years) that
it would be unable to meet—to “make available”—the
minimum allocations provided for in the contract?
14                      STOCKTON EAST WATER DISTRICT   v. US

    To answer this question, the trial court should have
considered not just the conduct of the parties during the
years for which liability has been found (1999–2004), but
also the effect of the announcements in 1993 (and after-
ward) that, because of the 1992 legislation, Reclamation
was not going to make available the minimum contractual
allocations. Instead, the trial court improperly declined to
consider this evidence and other evidence related to
Reclamation’s poor performance prior to 1999, focusing its
damages analysis on Central’s failure to request at least
the minimum amount of water specified in the contract in
the years following Reclamation’s non-performance an-
nouncements. Stockton E. Water Dist., 109 Fed. Cl. at
489-93. That was legal error, which impacted the charac-
terization of the non-breach world.
    The trial court misconstrued our earlier decision and
the law of contracts. We did not hold that, just because
liability for breach was found only for 1999–2004, the
determination of the hypothetical non-breach world must
disregard the effect of conduct occurring before 1999. To
analyze expectancy damages one looks at what would
have happened “had the contract been performed.” Re-
statement (Second) of Contracts § 344(a); Slattery v.
United States, 583 F.3d 800, 820 (Fed. Cir. 2009); Blue-
bonnet Sav. Bank, FSB v. United States, 266 F.3d 1348,
1355 (Fed. Cir. 2001); Glendale Fed. Bank, FSB v. United
States, 239 F.3d 1374, 1380 (Fed. Cir. 2001). In this case,
that question requires determining the effect of the non-
performance announcements starting in 1993.
    As noted above, Reclamation stated in 1993 that there
would be insufficient water available to meet the contract
minimums. In each of the years leading up to 1999,
Reclamation consistently announced that less than the
minimum amount of water would be available, continuing
to announce that less than the minimum amount of water
would be available even when, in 1999–2004, it lacked
any excuse. The “but for” world of performance in 1999–
STOCKTON EAST WATER DISTRICT   v. US                  15

2004 is a world without the uniform underlying reason for
not making the minimum water quantities available, i.e.,
a world in which the non-performance announcements
starting in 1993 did not occur.
    The trial court’s failure to examine what would have
happened had there been no such announcements start-
ing in 1993 had an important impact on its damages
analysis. The trial court assumed, erroneously, and
without considering the lingering impact of the pre-1999
announcements, that Central’s failure to request the
contractual minimum quantity of water every year was
because there was insufficient demand for the water from
Central’s potential customers. Absent actual demand, the
assumption was that no economic loss to Central could be
attributed to Reclamation’s failure to make available the
contracted-for amounts of water.
     In fact, it is eminently plausible that the Govern-
ment’s announced non-performance in 1993 and the years
following caused any lack of expressed demand for water
and for requests by Central for less than the contract
minimum quantities in 1999–2004. By 1994, and certain-
ly by 1999, Central and its farmer clients were on notice
that Reclamation was not going to supply the contractual
quantities of water, whether or not circumstances con-
spired to provide Reclamation legal excuses in certain
years. At some point most people stop asking for what
they have been told they are not going to get, and they
make other plans to meet their needs.
    In 1993, after the enactment of the 1992 legislation,
Reclamation first announced that it was going to make
sub-minimum allocations. That same year, the New
Melones Conveyance System was completed. Instead of
focusing on the impact of Reclamation’s announcements
and actions in all of the years prior to 1999 on Central
and the farmers, the trial court concentrated much of its
analysis on the simple fact that Central took less water
16                      STOCKTON EAST WATER DISTRICT    v. US

than it demanded or that Reclamation allocated to it in
1996, a year the trial court found would be indicative of
the non-breach world. Stockton E. Water Dist., 109 Fed.
Cl. at 489–93.
     In so doing, the trial court adopted a legally erroneous
limitation on the required analysis. It should have con-
sidered the impact of the announced breaches on the
requests from 1999–2004. The result would be that
testimony and data from 1993 onward are relevant to the
damages determination. Such testimony may be used to
show that farmers might have been requesting substan-
tial quantities of water, up to the maximums provided for
in Central’s contract with Reclamation, but for Reclama-
tion’s consistent announcements that less than the con-
tractual minimum amounts of water would be made
available to the Districts.
    Why would Central request water it was told would
not be available? It seems clear that having sufficient
water available is paramount to the success of the agri-
cultural enterprise, and failure to obtain the water needed
from Central quite plausibly would have caused the
farmers to look elsewhere, on their own, for water, or to
resort to using ground water.
    Because the trial court did not take into account the
effect of Reclamation’s announcements on the expecta-
tions of the district and the agricultural community it
served, we vacate the judgment denying any expectancy
damages and remand for a damages determination con-
sistent with this opinion. We leave it to the trial court to
determine if the record needs to be reopened to allow
evidence relevant to the damages occurring as a result of
the breaches as defined herein.
                iii. Cost of Cover Damages
    In its Brief as Appellee, the Government argues that
the trial court erred in awarding cost of cover damages
STOCKTON EAST WATER DISTRICT   v. US                      17

because Central’s audited financial statements do not
match the testimony regarding the amount paid to SSJID
for Central’s purchases of water. Further, the Govern-
ment argues that Central should not receive compensa-
tion for water purchased from SSJID at a higher price
than it could have been purchased from Reclamation
when Central failed to take all of the water allocated and
available from Reclamation during the breach period.
    Central argues that the Government waived its right
to challenge the trial court’s award of cost of cover dam-
ages by failing to cross-appeal this issue. Central further
argues that even if the Government had timely cross-
appealed, the trial court’s decision to award cost of cover
damages was correct and should be affirmed because the
trial court properly found Central’s evidence regarding
the amount paid to SSJID more reliable than the ambigu-
ous financial reports upon which the Government sought
to rely.
    “It is well-settled that a party must file a cross-appeal
if, although successful in the overall outcome in the
district court, the party seeks, on appeal, to lessen the
rights of its adversary or to enlarge its own rights.”
Lazare Kaplan Int’l, Inc. v. Photoscribe Technologies, Inc.,
714 F.3d 1289, 1293 (Fed. Cir. 2013) (citing El Paso
Natural Gas Co. v. Neztsosie, 526 U.S. 473, 479 (1999)).
Because the Government failed to make a proper cross-
appeal, it waived its right to make this argument on
appeal and we need not reach this issue. Thus, we affirm
the trial court’s finding on cost of cover damages.
                       CONCLUSION
   The judgment of the trial court is affirmed-in-part,
vacated-in-part, and remanded for reconsideration of
expectancy damages consistent with this opinion.
  AFFIRMED-IN-PART, VACATED-IN-PART, AND
                REMANDED
18                      STOCKTON EAST WATER DISTRICT   v. US

                          COSTS
     Costs are awarded to Appellant.