64 Fed. Cl. 165 | Fed. Cl. | 2005
OPINION AND ORDER
On February 3, 2004, defendant filed a motion for partial reconsideration and clarification. Defendant sought reconsideration of the Court’s November 23, 2004 decision, Precision Pine & Timber, Inc. v. United States, 63 Fed.Cl. 122 (2004), in which the court stated that the proper test for causation is the “substantial factor” test and found that plaintiff had raised genuine issues of material fact sufficient to survive summary judgment on the issue of causation. Defendant’s motion for clarification is addressed in a separate order filed this date.
Motions for reconsideration are governed by United States Court of Federal Claims Rule (“RCFC”) 59, and are granted
On January 19, 2005, the United States Court of Appeals for the Federal Circuit issued a decision in which it stated, “the Court of Federal Claims correctly rejected the ‘substantial factor’ test advocated by [plaintiff].” Cal. Fed. Bank v. United States, 395 F.3d 1263, 1269-70 (Fed.Cir.2005). The court held that “the causal connection between the breach and the lost profits must be ‘definitely established.’ ” Id. (citing La Van v. United States, 382 F.3d 1340, 1351 (Fed. Cir.2004)). “The inability to prove by a preponderance of evidence that profits would have been made but for the breach will therefore preclude recovery on a lost profits theory.” Id. (emphasis added). The court explained, however, “[t]hat is not to say that the breach must be the sole factor or sole cause in the loss of profits. The existence of other factors operating in confluence with the breach will not necessarily preclude recovery based on the breach.” Id.
Although our decision of November 23, 2004 adopted the “substantial factor” test, the substance of that test as set forth in our opinion is substantially similar to the test set forth in California Federal:
A breach is a “substantial factor” causing the lost profits if it directly and primarily caused the injuries. American Savings Bank, F.A. v. United States, 62 Fed.Cl. 6, 26 (2004) (citing Columbia First Bank, 60 Fed.Cl. at 105). “Plaintiffs must first show that defendant’s breach produced damage ‘inevitably and naturally, not possibly or probably.’ ” Franconia Associates v. United States, 61 Fed.Cl. 718, 747 (2004) (quoting Ramsey v. United States, 121 Ct. Cl. 426, 101 F.Supp. 353, 357 (1951)). The Federal Circuit held that “‘if the profits are such as would have accrued and grown out of the contract itself, as a direct and immediate result of its fulfillment, then they would form a just and proper item of damages, to be recovered against the delinquent party upon a breach of the agreement.’ ” Energy Capital [Corp. v. U.S.], 302 F.3d [1314] at 1328 [(Fed.Cir.2002)] (quoting Wells Fargo Bank, N. A. v. United States, 88 F.3d 1012, 1022-23 (Fed.Cir. 1996)). In order to establish that losses were “proximately caused” by defendant’s breach, plaintiff need not show that defendant’s conduct was the “sole” cause of its damages. Franconia, 61 Fed.Cl. at 750 (citing Long Island Sav. Bank, FSB v. United States, 60 Fed.Cl. 80, 90 (2004); Westfed Holdings, Inc. v. United States, 55 Fed.Cl. 544, 553 (2003)). Under this standard, plaintiff “need not show that each dollar claimed was entirely unaffected by outside events.” Id. (citing Citizens Federal Bank, FSB v. United States, 59 Fed. Cl. 507, 514-15 (2004)).
Precision Pine, 63 Fed.Cl. at 128. While we called this the “substantial factor” test, it possesses the same core requirements set forth in California Federal, i.e., the breach must cause the injury “directly and primarily,” and “inevitably and naturally, not possibly or probably.” Id. Additionally, this Court’s November 2004 opinion recognized that “plaintiff need not show that defendant’s conduct was the ‘sole’ cause of its damages.” Id.; Cal.Fed., 395 F.3d 1263, 1269-70 (“That is not to say that the breach must be the sole factor or sole cause in the loss of profits.”).
The Court recognizes that it is bound by the Federal Circuit’s decision in California Federal, and will evaluate Precision Pine’s claim for lost profits under the causation standard set forth in that case. But because the standard articulated in our November 2004 decision was substantially the same as the standard set forth in California Federal, we adhere to our decision that Precision Pine has raised genuine issues of material fact as to whether the Forest Service’s suspension of the contracts at issue caused
IT IS SO ORDERED.
