Hughes Communs. Galaxy, Inc. v. United States - 271 F.3d 1060 (Fed. Cir. 2001)

Rule:

The general rule in common law breach of contract cases is to award damages sufficient to place the injured party in as good a position as he or she would have been had the breaching party fully performed. Thus, a plaintiff must show that but for the breach, the damages alleged would not have been suffered. Moreover, the damages must have been foreseeable at the time the parties entered the contract, which requires that they be the natural and proximate result of the breach.

Facts:

Plaintiff, aerospace contractor, sued the United States government for breach of contract and for taking its property without just compensation. At the damages trial, plaintiff sought to prove its increased costs in launching satellites on expendable launch vehicles, rather than on the government's space shuttles, pursuant to the parties' launch services agreement (LSA). Following a trial on damages, the Court of Federal Claims awarded plaintiff, $ 102,680,625, and both parties appealed.

Issue:

Did the Court of Federal Claims err in awarding damages to the plaintiff? 

Answer:

No.

Conclusion:

Because the Court of Federal Claims did not abuse its discretion in determining damages for the government's breach of the LSA, the award was affirmed. The appeals court reasoned that in 8 of the 9 years duration of the LSA, the government had budgeted for more shuttle launches than it was able to launch. Thus, the Court of Federal Claims did not clearly err in finding that technical obstacles, rather than budget choices, prevented the government from launching more shuttles during the LSA contract period. Further, the government was acting in its proprietary capacity when it entered into the LSA, and accordingly, the contractor's only claim against the government was for breach of contract.