Free Response - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

PRECISION PINE & TIMBER, INC., Plaintiff, v. THE UNITED STATES, Defendant.

) ) ) ) ) ) ) ) ) )

No. 98-720C (Judge George W. Miller)

PLAINTIFF'S POST-TRIAL RESPONSE BRIEF

Alan I. Saltman SALTMAN & STEVENS, P.C. 1801 K Street, N.W. Suite M-110 Washington, D.C. 20006 (202) 452-2140 Counsel for Plaintiff OF COUNSEL: Richard W. Goeken Bryan T. Bunting SALTMAN & STEVENS, P.C. 1801 K Street, N.W. Washington, D.C. 20006 (202) 452-2140 Dated: November 14, 2005

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TABLE OF CONTENTS PAGE INTRODUCTION ........................................................................................................................................ 1 I. II. Several Of Defendant's Arguments Are Barred By The Law Of The Case Doctrine................................................................................................................................... 2 Defendant's Hypothetical Legal Argument That It Might Have Avoided A Breach Of Warranty Had It Suspended Operations In 1994 Does Not Absolve It Of Liability For Actually Breaching The Contracts In 1995 ............................................................................................................................................. 3 Defendant's Argument That It Could Breach The Contracts With Impunity For At Least 135 Days Remains Groundless ................................................................... 5 Defendant's Argument With Respect To "Partial Breach" Damages Is Unavailing ....................... 6 Precision Pine's Lost Profits Are Not The Product Of Collateral Activities ................................... 7 Precision Pine Is A Lost Volume Seller .......................................................................................... 8 Precision Pine's Damages Claims Are Fully Compatible With One Another............................... 10 Precision Pine's Damages Calculations Are Sufficiently Certain ................................................. 12 A. B. All Of Precision Pine's Contracts Would Have Been Completed Profitably During The Suspension.................................................................................... 12 The Existence Of Pulpwood On Some Sales Would Not Have Precluded The Profitable Harvesting Of The Sawlogs Remaining On The Breached Sales..................................................................................................... 13 But For The Suspension, All Of The Timber On The Breached Contracts Would Have Been Harvested In Order To Operate Precision Pine's Sawmills At Or Near Capacity .............................................................................. 15 1. 2. Harvest Of The Mud Contract Was Not Precluded By Other Litigation.................................................................................................... 18 But For The Forest Service's Breach, Precision Pine Would Have Conducted Substantial Harvesting Of The Manaco Timber Sale As Planned......................................................................... 19 Defendant's Reliance On Events That Occurred In The Post-Suspension Period Is Unavailing ................................................................. 21

III. IV. V. VI. VII. VIII.

C.

3.

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D.

It Was "Legally" Foreseeable That A Protracted Suspension And Breach of 11 of Precision Pine's Forest Service Timber Sale Contracts Would Result In Lost Profits ............................................................................ 21 Precision Pine Has Established Its Lost Profits With Reasonable Certainty .................... 25 1. 2. 3. Mr. Ness Used Mr. Porter's Projected Harvest Schedule With Minor Adjustment To Reflect Corrected Volumes..................................... 26 Precision Pine's Milling Schedule Provides A Reasonably Certain Basis For Determining Its Damages ....................................................... 29 Precision Pine's Damages Calculations Are Both Reasonably Certain And Conservative.................................................................................... 34 a. Precision Pine's Determination Of Lost Profits On Lumber Is Reasonably Certain And Conservative.................................. 34 (i) b. Defendant's Assertion That Precision Pine Ignored Pulpwood Logging And Hauling Costs........................ 45

E.

Precision Pine's Calculation Of Its Lost By-Products Revenue Is Reasonably Certain ............................................................................. 45 (i) (ii) (iii) (iv) (v) Chips.......................................................................................... 46 Bark ........................................................................................... 47 Shavings..................................................................................... 48 Grindings ................................................................................... 49 By-Products Revenue As A Whole ........................................... 49

4.

Mr. Ness' Calculation Of Profits In The Post-Suspension Period, Though Unnecessary To The Determination Of Damages In This Case, Is Reasonably Certain ................................................................................ 50

F.

Precision Pine's Increased Mill Costs Caused By The Suspension Are Fully Recoverable ............................................................................................................. 55 1. 2. 3. Precision Pine's Increased Mill Costs Were Caused By The Government's Protracted Suspension and Breach ............................................... 55 Precision Pine's Mill Inefficiency Claims Were Foreseeable To The Forest Service ............................................................................................... 57 Precision Pine's Calculation Of Its Mill Inefficiency Costs Is Reasonably Certain .............................................................................................. 58

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G.

Precision Pine's Increased Hauling Costs On The Hay Sale Were Caused By The Forest Service's Breach ....................................................................................... 60 1. The Increased Hauling Costs On The Hay Sale Were A Reasonable Effort By Precision Pine To Mitigate Its Damages Caused The Forest Service's Breach ................................................................... 60 Precision Pine's Increased Hauling Costs Were Foreseeable.............................. 62 Precision Pine's Calculation Of Its Increased Hauling Costs Is Reasonably Certain .......................................................................................... 64

2. 3. IX.

Precision Pine's Claims For Out-Of-Pocket Expenses Under CT6.01 Are Fully Recoverable ................................................................................................................... 65 A. B. Precision Pine's Out-of-Pocket Expenses Incurred In Preparing Its Claim Letters Are Recoverable Under Clause CT6.01..................................................... 65 Precision Pine's Claims For Items Of Miscellaneous Damage Are Recoverable ...................................................................................................................... 66 1. 2. 3. 4. 5. Precision Pine Is Entitled To Recover Its Additional Bond Costs....................... 66 Precision Pine Is Entitled To Recover Its Overhead And Profit On Move-Out Costs ............................................................................................. 66 Precision Pine Is Entitled To Recover Interest On Deposits As An Out-Of-Pocket Expense Under CT6.01.................................................... 67 Precision Pine's Snow Removal Costs In January of 1996, Which Were A Direct Result Of The Suspension, Are Recoverable................... 68 Precision Pine's Costs Of Transferring Logs From Eagar To Winslow In 1996, Which Were A Direct Result Of The Suspension, Are Recoverable .................................................................................................. 69 Overhead And Profit Are Recoverable On Those Costs That Precision Pine Seeks To Recover Under CT6.01 ................................................ 69

6.

CONCLUSION........................................................................................................................................... 70

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TABLE OF AUTHORITIES CASES PAGE

Admiral Fin. Corp. v. United States, 378 F.3d 1336 (Fed.Cir. 2004)....................................................................................................... 11 Aluminum Distributors, Inc. v. Gulf Aluminum Rolling Mill Co., 1989 WL 157515 (N.D. Ill.) .......................................................................................................... 10 Aptus Co. v. United States, 62 Fed.Cl. 808 (2004) ...................................................................................................................... 3 Assurance Co. v. United States, 813 F.2d 1202 (Fed.Cir. 1987)....................................................................................................... 67 Bohac v. Dept. of Agriculture, 239 F.3d 1334 (Fed.Cir. 2001)....................................................................................................... 24 Cavalier Clothes v. United States, 51 Fed.Cl. 399 (2001) .................................................................................................................... 59 Chain Belt v. United States, 115 F.Supp. 702 (Ct.Cl. 1953)....................................................................................................... 22 Cities Service Helex v. United States, 543 F.2d 1306 (Ct.Cl. 1976) ............................................................................................................ 6 Danac, Inc., ASBCA No. 33394, 97-2 BCA ¶ 29,184 (1997) ........................................................................... 60 Everett Plywood Corp. v. United States, 512 F.2d 1082 (Ct.Cl. 1975) ............................................................................................................ 6 Fertico Belgium S.A. v. Phosphate Chemicals Export Assoc., Inc., 70 N.Y.2d, 510 N.E.2d 334, 517 N.Y.S.2d 465 (1987) ................................................................. 10 First Heights Bank, FSB v. United States, 57 Fed.Cl. 162 (2003) ...................................................................................................................... 8 First Heights Bank, FSB v. United States, 422 F.3d 1311 (Fed.Cir. 2005)......................................................................................................... 7 Franconia Assocs. v. United States, 61 Fed.Cl. 719 (2004) ........................................................................................................ 51, 61, 70 Gardner Displays Co. v. United States, 171 Ct.Cl. 497, 346 F.2d 585 (1965) ............................................................................................. 24

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Glendale Federal Bank, FSB v. United States, 239 F.3d 1374 (Fed.Cir. 2001)....................................................................................................... 12 Globe Savings Bank, FSB v. United States, 65 Fed.Cl. 330 (2005) .................................................................................................................... 51 Gulf Contracting, Inc. v. United States, 23 Cl.Ct. 525 (1991) ...................................................................................................................... 65 Hercules Incorporated v. United States, 49 Fed.Cl. 80 (2001), aff'd, 292 F.3d 1378 (Fed.Cir. 2002).......................................................... 18 Hughes Communications Galaxy, Inc. v. United States, 271 F.3d 1060 (Fed.Cir. 2001)................................................................................................. 61, 62 International Terminal Operating Co., ASBCA No. 18118, 75-2 BCA ¶ 11,470 (1975) ........................................................................... 60 Kutner Buick, Inc. v. American Motors Corp., 868 F.2d 614 (3rd Cir. 1989) .......................................................................................................... 10 Landmark Land Co., Inc. v. F.D.I.C., 256 F.3d 1365 (Fed.Cir. 2001)....................................................................................................... 23 Lane County Audubon Soc'y. v. Jamison, 958 F.2d 290 (9th Cir. 1992)......................................................................................................... 4, 5 LaSalle Talman Bank v. United States, 317 F.3d 1363 (Fed.Cir. 2003)....................................................................................................... 12 Lewis v. United States, 1982 WL 36718 (Ct.Cl. July 16, 1982).......................................................................................... 24 Long Island Savings Bank v. United States, 67 Fed.Cl. 616 (2005) .................................................................................................................... 51 Miller v. Robertson, 266 U.S. 245 (1924)................................................................................................................... 9, 10 Myerle v. United States, 33 Ct.Cl. 1 (1867) .......................................................................................................................... 24 Northern States Power Co., Inc. v. United States, 224 F.3d 1361 (Fed.Cir. 2005)....................................................................................................... 11 Pacific Rivers Council v. Thomas, 30 F.3d 1050 (9th Cir. 1994)......................................................................................................... 4, 5 Pinewood Realty Ltd. Partnership v. United States, 617 F.2d 211 (Ct.Cl. 1980) ............................................................................................................ 22

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Precision Pine & Timber, Inc. v. United States, 50 Fed.Cl. 35 (2001) ............................................................................................................ 3, 4, 5, 6 Precision Pine & Timber, Inc. v. United States, 62 Fed.Cl. 635 (2004) ...................................................................................................................... 4 Precision Pine & Timber, Inc. v. United States, 63 Fed.Cl. 122 (2004) ............................................................................................................. passim Prudential Ins. Co. of America v. United States, 801 F.2d 1295 (Fed.Cir. 1986)....................................................................................................... 24 Ramsey v. United States, 121 Ct.Cl. 426, 101 F.Supp. 353 (1951), cert. denied, 343 U.S. 977 (1952)................................... 8 Raytheon Co. v. White, 305 F.3d 1354 (Fed.Cir. 2002), reh'g denied (2002)..................................................................... 70 Scott Timber Co. v. United States, 333 F.3d 1358 (Fed.Cir. 2003)............................................................................................... 2, 6, 58 Seaboard Lumber Co. v. United States, 308 F.3d 1283 (Fed.Cir. 2002)....................................................................................................... 21 Silver v. Babbitt, 924 F.Supp. 972 (D. Ariz. 1995) ............................................................................. 5, 18, 19, 28, 57 Singer Co. v. United States, 215 Ct.Cl. 281, 568 F.2d 695 (1977) ............................................................................................. 65 Solar Turbines v. United States, 16 Cl.Ct. 304 (1989) ...................................................................................................................... 11 Southwest Center For Biological Diversity v. United States, No. CIV-95-1927-PCT-RCB (D. Ariz.)......................................................................................... 18 Specialty Assembling & Packing Co., Inc. v. United States, 174 Ct.Cl. 153, 355 F.2d 544 (Ct.Cl.)............................................................................................ 24 T.C. Bateson Constr. Co. v. United States, 319 F.2d 135 (Ct.Cl. 1963) ............................................................................................................ 51 U.S. Industries v. Blake Construction Co., Inc., 671 F.2d 539 (D.C. Cir. 1982) ....................................................................................................... 60 United International Holdings, Inc. v. Wharf (Holdings) Limited, 210 F.3d 1207 (10th Cir. 2000)....................................................................................................... 10 Wilner v. United States, 23 Cl.Ct. 241 (1991) ...................................................................................................................... 65

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Wilner v. United States, 24 F.3d 1397 (Fed.Cir. 1994)......................................................................................................... 67 Yankee Atomic Elec. Co. v. United States, 42 Fed.Cl. 223 (1998), aff'd, 225 F.3d 1336 (Fed.Cir. 2000)........................................................ 10 STATUTES AND REGULATIONS U.C.C. § 2-708(2) ......................................................................................................................................... 6 MISCELLANEOUS M.A. Eisenberg, "The Principle of Hadley v. Baxendale," 80 Cal. L. Rev. 563 (May 1992) .................................................................................................... 24 Ralph C. Nash and John Cibinic Jr., ADMINISTRATION OF GOVERNMENT CONTRACTS, 3rd ed., 1995.............................................................................................................. 60 Alan I. Saltman, Must Profits Made In Transactions Involving Late-Delivered Goods Be Deducted From The Injured Party's Breach Damages? If Not, What Impact Should Late-Delivered Goods Have?, 78 St. John's L. Rev. 131 (2004)...................................................................................................................................... 10 RESTATEMENT (SECOND) OF CONTRACTS § 347 .............................................................................................................................................. 12 § 347 (a) and (b)............................................................................................................................. 12 § 347 cmt. a.............................................................................................................................. 11, 23 § 351 .............................................................................................................................................. 23 § 351(3).......................................................................................................................................... 23 11 Samuel Williston, WILLISTON ON CONTRACTS § 1338 (3d ed. 1968)................................................... 12 28 Wright & Gold, FEDERAL PRACTICE & PROCEDURE § 6184 (1993) ..................................................... 16

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INTRODUCTION In its post-trial brief ("D's Br."), defendant repeats several fallacious arguments in an attempt to prevent Precision Pine & Timber, Inc. ("Precision Pine") from recovering all of the damages it sustained.1 In doing so, defendant seeks to obscure the fact that its breach of the 11 contracts at issue precluded plaintiff from making substantial profits in 1995 through early 1997 and that plaintiff can only be made whole if it is awarded those lost profits unreduced by any post-suspension profits. The Court's determination of the damages to which plaintiff is entitled will be greatly facilitated if the following issues are disposed of at the outset: I. II. Defendant Has Repeated Several Arguments That Are Barred By The Law Of The Case. Defendant's Hypothetical Legal Argument That It Might Have Avoided Breach Of Warranty Had It Suspended Operations In 1994 Does Not Absolve It Of Liability For Actually Breaching The Contracts In 1995. Defendant's Argument That It Could Breach The Contracts With Impunity For 135 Days Remains Groundless. Defendant's Argument With Respect to "Partial Breach" Damages Is Unavailing. Precision Pine's Lost Profits Are Not The Product Of Collateral Activities. Precision Pine Is A Lost Volume Seller.2 Precision Pine's Damages Claims Are Fully Compatible With One Another. Precision Pine's July 17, 1995 "Profit Projections" Reflect A Worst-Case Scenario.3 The Existence Of Pulpwood On Some Of The Breached Sales Would Not Have Precluded The Profitable Harvesting Of The Sawlogs Remaining On The Breached Sales.

III. IV. V. VI. VII. VIII(A). VIII(B).

Defendant's repetitive arguments are catalogued and cross-referenced in Plaintiff's Appendix of Arguments which Defendant Raises on Multiple Occasions. See Appendix 1 attached hereto. No less than four of defendant's arguments are obviated by the fact that Precision Pine is a lost volume seller. Defendant, asserting without evidence that the projections accurately reflected the return that Precision Pine anticipated obtaining from the contracts, cites them to support no less than six arguments. 1
3 2

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A central premise of defendant's brief is that the Forest Service "merely" delayed plaintiff's performance and thus, once defendant lifted the suspensions after 16 months, plaintiff should have simply resumed timber harvest of the breached contracts as if it were the day that the Forest Service first imposed the suspensions. In essence, defendant seeks to convince this Court that somehow time simply "stood still" during the 16-month suspension. See, e.g., D's Br. at 20. As the evidence at trial showed, however, time did not stand still for Precision Pine and real opportunities to process the 25,000 mbf of sawlogs that remained on the breached sales and sell the resulting lumber between August 1995 and April 1997 were lost forever, plus it experienced costs that would not have been incurred but for defendant's breach. Plaintiff's quantification of these damages is reasonably certain and, if anything, conservative. Nothing in defendant's brief alters this conclusion. I. Several Of Defendant's Arguments Are Barred By The Law Of The Case Doctrine. In its April 18, 2005 "Motion in Limine With Respect To Defendant's Contentions That Are Barred By The Law Of The Case Doctrine," Precision Pine pointed out that defendant is barred from relitigating legal points that have already been decided against it, sometimes on more than one occasion. On April 29, 2005, the Court issued an order denying Precision Pine's motion in the interest of the Court receiving full briefing, but noting that "[i]n its response Plaintiff would be within its rights to argue that the law of case precludes a finding in favor of the Government on certain issues." Unfortunately (but predictably), defendant has made all of these failed points yet again. Because defendant's position on these points is both well-understood and has been rejected by the Court, plaintiff respectfully requests that prior to oral argument the Court enter an order precluding defendant from continuing to contend that: 1. Scott Timber Co. v. United States, 333 F.3d 1358, 1372 (Fed.Cir. 2003), holds that increased sawmill costs are unrecoverable at common law. Precision Pine & Timber, Inc. v. United States, 63 Fed.Cl. 122, 136 (2004). See discussion infra at 58; Contract clause CT6.25 does not contain a warranty. Order and Opinion on Reconsideration dated January 27, 2004 at 3. See discussion infra at 5 n.8;

2.

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3. 4. 5. 6. II.

The processing, manufacturing, and selling of timber are a collateral activity. 63 Fed.Cl. at 131. The first 135 days of the suspension were not a breach. Precision Pine & Timber, Inc. v. United States, 50 Fed.Cl. 35, 70 (2001). See discussion infra at 5. Lost profits as a result of a protracted suspension were not foreseeable. Precision Pine, 63 Fed.Cl. at 131. See discussion infra at 21-22. The actual loss that occurred must have been foreseeable. Precision Pine, 63 Fed.Cl. at 130. See discussion infra at 23.

The Government's Hypothetical Legal Argument That It Might Have Avoided A Breach Of Warranty Had It Suspended Operations In 1994 Does Not Absolve It Of Liability For Actually Breaching The Contracts In 1995. As its leading argument, defendant contends for the first time, albeit without citation to any

supporting authority, that it might not be responsible for all of the damages caused by its breach in 1995, because it might have lawfully suspended other of Precision Pine's contracts in 1994, but failed to do so. D's Br. at 5. Carrying this argument one step further, defendant contends that it was plaintiff's duty to determine how its damages might have been affected if the government had, hypothetically, submitted its Forest Plans for consultation in 1994.4 Notably, none of the government's five experts opined that Precision Pine failed to consider this issue in its damage calculations, nor did the government identify this legal issue at summary judgment, in its pre-trial memorandum or its opening statement at trial. This silence is likely because this newly hatched argument is fatally flawed in several respects.5 First, even accepting the premise that defendant might have taken some action to comply with its consultation obligation under the ESA without breaching the contracts at some point in time (something In its new litigating position, the government is really seeking further reconsideration of the Court's July 30, 2001 liability ruling, albeit in the guise of an argument on damages. The government, however, has not identified any change in the law or other appropriate circumstance as to why it could not have made its argument during the liability phase of this case that could justify reconsideration at this time. Aptus Co. v. United States, 62 Fed.Cl. 808, 811 (2004). The government makes its argument by cobbling together three passages from the liability ruling, each of which appears on a different page of the decision, and then distorting the meaning of these passages by excising key aspects of them through the use of seven ellipses. Compare D's Br. at 5 with Precision Pine, 50 Fed.Cl. at 68-70. 3
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that for obvious reasons was not litigated in this case), defendant is not absolved from actually breaching the contracts at a later time. Indeed, as this Court recently discussed in the context of the government seeking breach of contract damages against a contractor, the fact that the contractor might have declared material breach and walked away form the contracts during an earlier period did not relieve it of liability for a subsequent breach of contract. See Precision Pine & Timber, Inc. v. United States, 62 Fed.Cl. 635, 647-50 (2004). Certainly, if defendant here had acted lawfully with respect to some of the breached contracts, then plaintiff's damages might be different, but that is simply not what happened. Second, the government's hypothetical assumes without any factual support that the Forest Service's consultation on the Forest Plans would have taken place in the fall of 1994 and thereby resulted in the suspension of other of plaintiff's contracts during that harvest season. D's Br. at 5. Neither assumption is necessarily correct. Rather than taking place during the 1994 fall harvest season, the consultation on the Forest Plans could just as easily have taken place at another point in time and entirely avoided impacts to Precision Pine's operation of its contracts. Indeed, if one wishes to engage in hypotheticals, it is entirely possible that the Forest Service could have avoided any additional impact to plaintiff's harvesting operations simply by submitting its Forest Plans for consultation at the same time that it engaged in consultation on all sales in the Region following the listing of the Mexican spotted owl in 1993.6 In fact, in 1993 the Fish & Wildlife Service ("FWS") repeatedly urged the Forest Service to submit its Forest Plans as part of a programmatic consultation; the Forest Service, however, refused to do so. See Precision Pine, 50 Fed.Cl. at 42-43. Thus, the government's hypothetical suspension of contracts

This is certainly true in light of the fact that the Ninth Circuit's opinion in Lane County Audubon Soc'y. v. Jamison, 958 F.2d 290, 293 (9th Cir. 1992), issued prior to the listing of the Mexican Spotted Owl, found that Forest Plans are "`agency action' pursuant to the ESA and that consultations must be reinitiated on an existing [forest plan] if a new endangered species is listed." Precision Pine, 50 Fed.Cl. at 41. For that matter, the Forest Service might also have consulted in the winter of 1993-1994 following the Ninth Circuit ruling in Pacific Rivers Council v. Thomas, 30 F.3d 1050, 1053 (9th Cir. 1994) (again requiring consultation on Forest Plans) and expeditiously completed consultation outside of the normal operating season for all of Precision Pine's timber sales. 4

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in the fall of 1994 is just one, and not even the best, conjectural alternative to breaching the contracts in 1995-1996 ­ which, of course, is what the Forest Service actually did. Even if the Forest Service did not decide to submit its Forest Plans for consultation until after the 1994 ruling in Pacific Rivers, it still could have minimized or eliminated the impact on Precision Pine by engaging in and completing the consultation on them in the winter of 1994-1995, i.e., outside of the normal operating season of the sales. Rather than doing so, however, it chose instead to thumb its nose at the ESA, the Ninth Circuit's rulings in Lane County and Pacific Rivers and to take no action until ordered to so by the Arizona district court in Silver v. Babbitt, 924 F.Supp. 972 (D. Ariz. 1995), at perhaps the worst possible time for plaintiff, the eve of the fall harvesting season. In such circumstances, it is emphatically not plaintiff's obligation to consider the many ways in which the Forest Service might have acted differently and the various ways in which such hypothetical actions might have impacted plaintiff's damages. The fully litigated fact remains that the Forest Service breached the contracts beginning on August 25, 1995 and remains for liable for the damages that plaintiff proved at trial. III. Defendant's Argument That It Could Breach The Contracts With Impunity For At Least 135 Days Remains Groundless. Precision Pine anticipated that defendant would contend that this Court found in its decision on liability that defendant could suspend the contracts at issue with impunity so long as the suspension did not substantially exceed 135 days. See P's Br. at 11-13. Defendant makes its argument (see D's Br. at 6) despite the fact that this Court found that defendant unreasonably failed to enter into consultations until ordered to do so by a court and thus significantly hindering Precision Pine's operations. Indeed, the Court ruled that the government's two-month delay in starting consultation with regard to all 11 sales here in issue was both "inexplicable" and "unreasonable." Id. at 70.7 Thus, contrary to defendant's contention,

This breach determination based on unreasonable delay was wholly apart from the government's breach of the warranty made in six contracts. 50 Fed.Cl. at 73-74. 5

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with respect to the breached contracts, the Court did not find that a suspension of less than 135 days was per se reasonable and, therefore, not a breach.8 Simply put, this Court found that all of the sales which the Forest Service suspended on August 25, 1995 were breached, i.e., the Forest Service violated its duty not to hinder performance, except for the two sales that were released a few weeks after being suspended. 50 Fed.Cl. at 73-74. IV. Defendant's Argument With Respect To "Partial Breach" Damages Is Unavailing. Defendant argues that because plaintiff elected not to terminate the contracts upon defendant's material breach, it is entitled to only what it earned from continued performance and is "barred" from recovering lost profits. D's Br. at 9-11, citing Cities Service Helex v. United States, 543 F.2d 1306 (Ct.Cl. 1976). This argument is fallacious for the reasons set forth in P's Br. at 13-15. Similarly, defendant's reliance on Everett Plywood Corp. v. United States, 512 F.2d 1082 (Ct.Cl. 1975), in support of its contention that the appropriate measure of damages for partial breach is merely the difference between contract price and the market value of timber at the time of breach is misplaced for several reasons. The clear implication of Everett Plywood is that where, as here, a plaintiff in the business of manufacturing timber into lumber products is unable to obtain cover, the appropriate market price to be considered is the market price of the manufactured lumber products that would have been made and sold but for the breach, id. at 1091 -- which is precisely what Precision Pine has done. Moreover, defendant ignores the fact that U.C.C. § 2-708(2), the portion of the U.C.C. upon which the

In a footnote, the government argues that in the liability ruling, "the Court erred in finding clause CT6.25 contains an express warranty." D's Br. at 9 n.5. The government then further claims that the Federal Circuit's decision in Scott Timber invalidates this Court's ruling on the warranty issue. Id. The government, however, has already raised precisely these same arguments in "Defendant's Motion for Partial Reconsideration of the Court's July 30, 2001 Ruling Upon Liability," dated November 14, 2003. There, the government argued that "the liability decision [with respect to the existence of a warranty in clause CT6.25] in the present case is contrary to the recent Federal Circuit decision in Scott Timber. . . ." See Order and Opinion dated January 27, 2004 at 3. This Court rejected that argument, holding that Scott Timber did not effectuate a change in controlling law. Id. at 4. This Court also rejected the defendant's "new legal theories and facts" as to its liability for breach of warranty and reaffirmed the Court's ruling that the Forest Service remained liable for breaching the warranty in clause CT6.25. Id. at 5-6. 6

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concept of lost volume is based, indicates that if the contract price/market price difference is inadequate to put plaintiff in as good a position as performance would have done, then the measure of damages is the profit that it would have made by full performance plus any incidental damages. V. Precision Pine's Lost Profits Are Not The Product Of Collateral Activities. Defendant contends that Precision Pine's lost profits are the product of collateral activities (D's Br. at 12-15) for all of the reasons stated in P's Br. at 4-8, however, this is not the case.9 As Mr. Lewis testified, he was unaware of any purchaser who removed the sawlogs from a sale and then never processed them or who sold sawlogs that could have been used for lumber production for firewood. Tr. at 3120. Moreover, defendant did not provide any examples of sawlogs that were harvested by Precision Pine and used for anything but the production of lumber.10 The simple fact remains that a goal of the Forest Service's timber sale program was to supply local industry with raw material from which lumber would be manufactured and sold. PPFF 170. As the Forest Service required its purchasers to certify, this is precisely what historically happened to the sawlogs on all of Precision Pine's timber sales. PPFF 177. Virtually all of the cases cited by defendant were addressed in P's Br. at 4-8 and for the reasons set forth there are inapposite. The recent decision in First Heights Bank, FSB v. United States, 422 F.3d Although defendant claims that "purchasers of timber sales frequently do not . . . have access to a sawmill" (D's Br. at 12), the testimony cited does not support this proposition. See, e.g., Tr. 172021, 1730, 1740 (Reidhead) (All sawlogs removed from Precision Pine's sales went to Precision Pine's sawmills); id. at 1765-66 (The logs from the few sales purchased by Tri-Star Logging were sold to entities with processing facilities). In a footnote, defendant misleadingly contends that Precision Pine sold "logs" to third parties for use in their mills, sold "logs" to third parties for use as pulpwood, sold "logs" to third parties as firewood or stacked and left "logs" unused. While some of these things may have occurred with respect to pulpwood logs, something for which Precision Pine had no use in its operations, defendant has cited no evidence that the sawlogs that Precision Pine harvested from its Forest Service timber sales were ever used for anything but the production of lumber at its own sawmills. Indeed, defendant's lone citation for a situation where Precision Pine allegedly sold sawlogs to a third party is the agreement whereby Precision Pine transferred the Kettle contract to Stone Container, who operated a sawmill in Eagar, following the closure of Precision Pine's Eagar sawmill at which the Kettle sale was to have been processed. 7
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1311 (Fed.Cir. 2005), is not to the contrary. There, the court, after affirming the trial court's award of $48.7 million in lost tax benefit, found that plaintiffs were not entitled to lost profits that they claimed would have made by reinvesting money from the breached contract into another business, because: [N]o specific reference was made during negotiations to homebuilding projects for which the tax benefits [conferred under the breached contract] were to be used. Nor did the [breached contract] inherently refer to the alleged additional home building projects. The subject of the contract in this case was simply money. Id. at 1318 (As the trial court had observed, "Nothing plaintiffs have offered the court, however, supports an understanding by the United States that the plaintiffs needed the net tax savings for purpose of investing in home building projects." First Heights Bank, FSB v. United States, 57 Fed.Cl. 162, 174 (2003)). By contrast, the evidence in this case is overwhelming that the Forest Service's contract was prepared and administered with the production of lumber from the timber being sold in mind (see Section II, of P's Br.).11 VI. Precision Pine Is A Lost Volume Seller. At trial, Precision Pine demonstrated that it was a lost volume seller because, but for the government's breach, it would have processed all of the timber on the breached contracts during the period of the suspension and the ensuing winter (PPFF 389) and, thereafter, would have purchased sufficient timber from sales offered by the Forest Service in the post-suspension period and earned profits on that timber in that time period as well. P's Br. at 44-47. Defendant studiously avoids these facts and maintains instead that providing Precision Pine with the profits it lost during the suspension period would result in a "windfall." Defendant's approach is fundamentally incorrect under the law of this Circuit because, as the parties agree, the goal of expectancy

Defendant's citation to Ramsey v. United States, 121 Ct.Cl. 426, 101 F.Supp. 353, 355 (1951), cert. denied, 343 U.S. 977 (1952), is also misplaced. There, the government's sole obligation under the contract was to pay for goods manufactured and delivered by plaintiff, while the lost profits sought were those it would have allegedly made in its over-all business activities. Rejecting authority to the contrary, the court found that, "in the circumstances and under the terms of the contact involved in this case," the lost profits claimed were on collateral undertakings and, therefore, not recoverable. Id. at 357 n.1. 8

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damages is to put the non-breaching party into as good a position as it would have been in but for the breach. E.g., Bluebonnet Sav. Bank, FSB v. United States, 266 F.3d 1348, 1355 (Fed.Cir. 2001). Deducting post-suspension profits from the amounts that Precision Pine would have earned but for the breach, does not accomplish this goal but rather would put Precision Pine into a much worse position than it would have been in but for the government's breach because, as a lost volume seller, it would have earned profits on lumber sales both during the period of the suspension as well as in the "postsuspension" period. As explained in P's Br. at 46-47, defendant's contention that Precision Pine is not a lost volume seller because at trial it failed to specify exactly which contracts it would have bid on had the government not breached the instant contracts misstates the law. A showing of the general availability of raw material from which the second profit could have been made is sufficient. Miller v. Robertson, 266 U.S. 245, 256 (1924). Because Precision Pine demonstrated the availability of significant quantities of Forest Service timber after the suspension (see PPFF 370-71), it is entitled as a lost volume seller to the full measure of its lost profits it sustained during the period of the suspension, without the offset of any post-suspension profits.12 Seizing on an illustration from the RESTATEMENT noted by the Court in last fall's decision on summary judgment (see 63 Fed.Cl. at 133), defendant asserts that the only possible measure of lost profit is "net profits."13 Of course, this Court did not find that "net profits" are the only appropriate measure of

Having established that raw material was available in the post-suspension period, the burden shifted to defendant to demonstrate that Precision Pine could not have had both sales and therefore that the profit on the "second" sale should be used to reduce plaintiff's profit. See P's Br. at 45. Defendant did not, however, carry its burden on this point. In fact, defendant concedes that Precision Pine actually bought six timber sale in the immediate post-suspension period. Tr. 671-77, 1089 (Porter). Even defendant believes that the illustration from the RESTATEMENT would have to be recast to comport with its own view of the lost volume seller situation presented by the instant case. D's Br. at 17 n.10. However, defendant's hypothetical in footnote 8 misses the mark in that the reinstatement of the original contract between A and the third-party "C" appears to have permitted A to do what it had planned to do (pave both B's and C's parking lots) in a manner very close to that originally contemplated. 9
13

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lost profits in this case nor does anything in the RESTATEMENT illustration specifically consider, let alone mandate, this result. Moreover, defendant proffers neither legal authority nor analysis in support of its position but simply points to the fact that the words "net profits" appear in the RESTATEMENT. For all of the reasons explained by Mr. Ness (and concurred in by defendant's expert, Dr. Neuberger), Mr. Ness' calculation of profits in this case is wholly appropriate. P's Br. at 17-18; PPFF 64, PPFF 205; Tr. 358990 (Neuberger); accord Kutner Buick, Inc., v. American Motors Corp., 868 F.2d 614, 617-18 (3rd Cir. 1989) (fixed costs, which remain the same over the range of relevant activities, are irrelevant to the determination of the loss of net profit due to a breach). VII. Precision Pine's Damages Claims Are Fully Compatible With One Another. Defendant makes two related arguments suggesting that some elements of Precision Pine's damages claim are incompatible, i.e., that (1) damages for common law breach and out-of-pocket costs under clause CT6.01 cannot both be recovered, and (2) common law claims which seek both lost profits and increased costs are incompatible. As to the former, it is well-settled that where, as here, the government has not clearly and fully exculpated itself under the contract for all damages caused by its breach, a contractor may obtain that relief provided under the contract and also retains a cause of action at common law for damages. Yankee

Examples applicable to the instant case deal with sequential transactions where the plaintiff was unable to proceed with a transaction as it had originally planned. Such an example is where a buyer is unable to resell the relatively fungible corpus of the contract or items produced from it during a particular period but was able to proceed with a subsequent transaction once the defendant finally acted in accordance with its obligations. In those instances, where the plaintiff would have been able to accomplish the subsequent transaction even if the defendant had not performed under the contract, not considering profits realized on the post-breach transactions is entirely appropriate. Fertico Belgium S.A. v. Phosphate Chemicals Export Assoc., Inc., 70 N.Y.2d 76, 510 N.E.2d 334, 517 N.Y.S.2d 465 (1987); see Aluminum Distributors, Inc. v. Gulf Aluminum Rolling Mill Co., 1989 WL 157515 (N.D. Ill.); Miller, 266 U.S. at 243; United International Holdings, Inc. v. Wharf (Holdings) Limited, 210 F.3d 1207, 1230-31 (10th Cir. 2000). See also Plaintiff's Response to Defendant's Motion for Partial Summary Judgment Regarding Damages at pages 53-60 (Appended hereto for the convenience of the Court in Appendix 2); Alan I. Saltman, Must Profits Made In Transactions Involving Late-Delivered Goods Be Deducted From The Injured Party's Breach Damages? If Not, What Impact Should Late-Delivered Goods Have?, 78 St. John's L. Rev. 131 (2004). 10

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Atomic Elec. Co. v. United States, 42 Fed.Cl. 223, 232-33 (1998), aff'd, 225 F.3d 1336 (Fed.Cir. 2000). See Northern States Power Co., Inc. v. United States, 224 F.3d 1361 (Fed.Cir. 2005); Solar Turbines v. United States, 16 Cl.Ct. 304, 306 (1989). As to the latter argument, defendant cites a single case, Admiral Fin. Corp. v. United States, 378 F.3d 1336, 1344 (Fed.Cir. 2004), for the unremarkable proposition that expectancy damages and restitution are alternatives. D's Br. at 8. Although a plaintiff has the option of suing for damages or seeking restitution upon the occurrence of a material breach, Precision Pine is not seeking "restitution."14 Defendant's related contention that because Precision Pine's lost profits calculation takes into account the costs that would have been incurred in hauling and milling the breached contracts, Precision Pine's recovery of its increased hauling and milling costs caused by the breach along with its lost profits would represent a "double recovery" is equally incorrect. D's Br. at 8. Although defendant properly asserts that in determining lost profits Mr. Ness accounted for the costs that Precision Pine would have actually incurred in hauling and milling the timber on each of the breached contracts had there been no suspensions, Precision Pine merely seeks to recover its increased costs, i.e., those costs over and above what it would have incurred had there been no breach both at its sawmills (due to the inefficiencies foisted on it by the government's breach, see P's Br. at 51-6; PPFF 387) and in the form of additional costs it incurred in hauling timber from the Hay sale a greater distance due to the breach. P's Br. at 5763. These additional costs are distinct items of damages, wholly separate from Precision Pine's claim for lost profits. As the authorities cited above make clear, expectancy (i.e., benefit of the bargain) damages

14

As set forth in the RESTATEMENT:

A party is entitled to restitution under the rules stated in this Restatement only to the extent that he has conferred a benefit on the other party by way of part performance or reliance. Id. at § 370 (emphasis supplied). See id. cmt. a., illustration 1. Here, as noted, the out-of-pocket expenses that Precision Pine seeks to recover have not been paid to the government but, rather, are part of Precision Pine's expectancy damages. 11

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include both gains prevented and losses caused by the breach. See 11 WILLISTON § 1338; RESTATEMENT § 347(a) and (b). These increased costs caused by the suspension do not constitute a "double recovery," nor would their award to plaintiff represent a "windfall." Defendant's reliance on LaSalle Talman Bank v. United States, 317 F.3d 1363, 1371 (Fed.Cir. 2003), is misplaced as the case does not support the contention that any increase in costs is subsumed in a claim for lost profits. Indeed, LaSalle Talman recognizes that "expectancy damages often are equated with lost profits, and may include other damage elements." Id. quoting Glendale Federal Bank, FSB v. United States, 239 F.3d 1374, 1380 (Fed.Cir. 2001) (citing RESTATEMENT (SECOND) OF CONTRACTS § 347). These authorities explain that, under the umbrella of expectancy damages, an injured party has a right to damages based on his expectation interest as measured by (a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach. RESTATEMENT § 347 (emphasis added). It is precisely such "other damage elements," i.e., the increased costs imposed on it by the government's breach, that Precision Pine seeks to recover. VIII. Precision Pine's Damages Calculations Are Sufficiently Certain. A. All Of Precision Pine's Contracts Would Have Been Completed Profitably During The Suspension.

Defendant argues that some of plaintiff's timber sale contracts would have been unprofitable had they been harvested during the suspension. D's Br. at 21-23. The alleged bases for this are: (1) lumber prices were "low" during the suspension; (2) plaintiff's July 17, 1995 projections show that "many" of the contracts would not have been profitable; and (3) the cost of harvesting pulpwood at a time when there was allegedly no outlet for it would have rendered some of the contracts unprofitable. Contrary to the picture defendant seeks to paint, lumber product prices were hardly low throughout the period of the suspension; rather, lumber product prices bottomed in about January of 1996 and rose rapidly throughout the remainder of the suspension. PPFF 246(e). Additionally, whenever Ponderosa Pine lumber product prices were low as reflected in the WWPA index, Precision Pine received 12

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a corresponding reduction in the stumpage price it was required to pay under its Forest Service contracts. PPFF 11. Thus, defendant's contention that lumber prices were "low" for the first few months of the suspension, in no way demonstrates that the contracts could not or would not have been operated profitably at that time or throughout the suspension period. Moreover, the fact that Precision Pine would have completed the subject contracts profitably is actually confirmed by the artificially low profits reflected in the July 17, 1995 projections. (DX 521-45.) That is, even under these worst case conditions, the projections show that plaintiff would have earned more than $1.6 million. PPFF 1382. Moreover, because the lumber product prices during the bulk of the suspension period were far better than those set out in Mr. Porter's worst case scenario (see PX 131, App. A at 1), plaintiff's overrun would have been far greater than 1.1 (PPFF 209-240) and its costs would not have been as great as indicated in DX 519, 521-545 (PPFF 1384) by definition Precision Pine's profits would have been considerably higher than $1.6 million reflected in D's Br., App. A at DA2.15 B. The Existence Of Pulpwood On Some Sales Would Not Have Precluded The Profitable Harvesting Of The Sawlogs Remaining On The Breached Sales.

Defendant's argument that the existence of pulpwood on some of the sales would have prevented the profitable harvest of the sales is erroneous. Indeed, more than 45% of the sawtimber at issue was on sales that had no pulpwood component. PPFF 273. Additionally, defendant's contention that there was no outlet for roundwood during the suspension is incorrect. As the TSSAs for the Brann, HutchBoondock and Mud contracts demonstrate, pulpwood was harvested during the suspension. PPFF 1270. Moreover, even assuming that the Stone would not have taken any pulpwood directly from Defendant relegates its discussion of the "contribution margin" analysis of Precision Pine's profitability as made by its accounting expert, Mr. Moosman, to a footnote. D's Br. at 22 n.13. Mr. Moosman's opinions, however, are not even worthy of that passing mention because his analysis is fatally flawed in so many ways as to be worthless. For example, defendant cites to a calculation contained on DX 777 at page 15 in support of its contention that Precision Pine's sales would have had a negative contribution margin if harvested during the suspension; however, Mr. Moosman himself disavowed that calculation. Tr. 5247-5249 (Moosman). Additionally, Mr. Moosman bases much of his report on the wholly incorrect assumption that the July 17, 1995 "profit projections" were an attempt to accurately determine the profitability of the contracts, which they were not. PPFF 1381. 13
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Precision Pine during the period of the suspension, the pulpwood on the sales would not have prevented profitable harvest of the sawtimber because: 1. Sale of the pulpwood could have been achieved by Tri-Star Logging (TriStar), Precision Pine's logging subcontractor. P's Br. at 48. 2. Precision Pine could have sought Forest Service concurrence in the deferral of pulpwood harvesting until Stone was willing to take it at a later time.16 P's Br. at 48. 3. Even without Forest Service concurrence, at least 82% of the sawtimber on the sales could have been harvested during the suspension by essentially operating on the three largest payment units and not removing the pulpwood until such time as there was a market for it. P's Br. at 47-49, or 4. If there were absolutely no outlet for pulpwood during the suspension period as defendant asserts, Precision Pine would have been relieved of its obligations to remove the pulpwood pursuant to contract clause B(T)6.4 (contained in all the contracts) due to "gross economic impracticability." P's Br. at 49-51. Thus, under no circumstances would Precision Pine actually have sustained large losses on pulpwood harvesting as asserted by defendant.17 Moreover, Precision Pine's arrangement with Tri-Star further insulated it from losses on pulpwood. P's Br. at 48. That is, Tri-Star would harvest the pulpwood and haul if off of the sale area at its own expense and from the proceeds of the sale of the pulpwood pay Precision Pine the stumpage and related costs that Precision Pine had to pay the Forest Service. PPFF 270. Any profit that was derived

The evidence at trial showed that the Forest Service consistently granted Precision Pine's requests to defer pulpwood harvest during the suspension period. PPFF 271. In support of its contention that Stone was not taking pulpwood from Precision Pine during the suspension period, defendant has drafted misleading proposed findings of fact which claim that the Precision Pine's financial statements for FYE 1996 and 1997 show no revenue for roundwood. See DPFF 67-68. However, Precision Pine's financial statements do not show revenue (or for that matter costs) for roundwood harvesting, even in periods when there is no dispute that Stone was taking pulpwood from Precision Pine's sales. See, e.g., Tr. 5226 (Moosman). For example, in the summer of 1995 which is in Precision Pine's FYE 3/31/96, the evidence at trial demonstrated that significant quantities of pulpwood were being removed from Precision Pine's sales and sold to Stone. Tr. 1733-38 (Reidhead) (explaining PX 1010). Yet, no line item for pulpwood costs or revenues appears in that statement. This is because, as the evidence at trial showed, the revenues and costs for pulpwood inured to Tri-Star, not Precision Pine. PPFF 270. 14
17

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from the transaction would belong to Tri-Star. Id.18 In fact, Tri-Star had presented and provided support for the pulpwood costs and revenues from its own financial statements as the basis for its pass-through claim for $300,000+ in lost pulpwood profits; however, the Court dismissed that claim at summary judgment. 63 Fed.Cl. at 139. Thus, defendant's assumptions that "Precision Pine would have incurred the cost of cutting and removing roundwood, but would have earned no revenues from roundwood sales" and that Mr. Ness should have included Precision Pine's "cost" of logging and hauling roundwood in his calculation of damages are simply incorrect. Defendant compounds its incorrect assumptions by charging all of these alleged costs of harvesting pulpwood against the profits shown on Precision Pine's worst case scenario profit projections of July 17, 1995 and thus claims that nine of the eleven contracts would have been unprofitable. D's Br. at 22.19 These arithmetic exercises purport to show just how unprofitable the sales really were. They do not; rather, they simply and improperly take worst case scenarios as a baseline and then heap additional costs on them that were not Precision Pine's to bear. This approach is completely divorced from the reality that if and when harvesting of pulpwood occurred any costs of logging and hauling were going to be incurred by Tri-Star, not Precision Pine. C. But For The Suspension, All Of The Timber On The Breached Contracts Would Have Been Harvested In Order To Operate Precision Pine's Sawmills At Or Near Capacity.

At pages 24-25 of its brief, defendant repeats its argument that plaintiff would not have harvested any of the sales at issue in the absence of a detailed written plan establishing, as of August 25, 1995, exactly how harvesting would have been accomplished on each sale during the 16-month period of the

For this reason, Mr. Ness testified that all of the roundwood revenue as well as the logging and hauling costs from the multi-product sales set forth on page 27 of Ex. 4 of PX 131 would have inured to Tri-Star. PPFF 270 n.23. The fact that the costs of roundwood logging and hauling used in Mr. Ness' report were Tri-Star's was confirmed at trial by Mr. Moosman. Tr. 5186. See PPFF 270(c). Further reinforcing the fact that pulpwood harvest would have resulted in neither profits nor losses for Precision Pine, even the worst case scenario profit projections for the multi-product sales contain no reference to pulpwood harvesting costs or profits. PX 63-85; see PPFF 268-70. 15
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suspension. Apparently, defendant continues to believe that in the absence of such a detailed written plan, Mr. Porter and his employees could not operate. This argument is, of course, belied by the fact that Precision Pine operated profitably at all times prior to the suspension (PPFF 242), yet defendant has identified no written "harvest plan" (which it claims is the sine qua non for all timber harvesting) for any of those time periods. Contrary to defendant's assertion that plaintiff could not identify which of the sales would have been harvested during the suspension, Mr. Porter explained that all of the remaining timber on the breached sales would have been harvested between August 25, 1995 and December 4, 1996 and provided the reasons why this would have occurred. See PPFF 246. Defendant erroneously avers that Mr. Porter's inability at trial to recall the precise sequence of harvesting during the 16-month suspension without referring to data that he had prepared many years ago (i.e., the data reflected in PX 131, App. A at 4) somehow proves that Precision Pine never had any idea as to when or if it would have harvested each of the breached sales. It does not. It simply means, quite unsurprisingly, that Mr. Porter could not testify to that level of detail without reference to documents that he had prepared on the subject in the past.20 Defendant argues that in DX 294, the February 1995 annual operating schedule that plaintiff submitted to the Forest Service pursuant to contract clause BT6.31, Precision Pine "misrepresented" its anticipated harvesting projection and that as a result plaintiff should be barred from using the harvesting schedule prepared by Mr. Porter and used by Mr. Ness in computing Precision Pine's damages. D's Br. at 24 n.14, 33. As defendant well knows: clause BT6.31 simply calls for the submission of a listing of "anticipated" major operations on a sale and can always be altered "upon reasonable notice to the Forest Service" for a host of reasons including "weather, markets, or other unpredictable circumstances" (PPFF 1244); that Precision Pine had never followed such plans without change in the past (PPFF 242); that It is for this reason that a judge may permit a trial witness to consult documents containing factual detail, especially where the subject of her testimony is so lengthy or detailed that even a fresh memory would be unable to recite the items unaided. 28 Wright & Gold, FEDERAL PRACTICE & PROCEDURE § 6184 at 463 (1993) (and cases cited therein). 16
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plaintiff's February 1995 pre-season harvest schedule clearly demonstrated that it was tentative and subject to change (PPFF 1244);21 the February schedule cited by defendant does not include all of Precision Pine's operations planned for 1995 (id.);22 the Forest Service introduced no evidence (because there is none) of the Forest Service refusing to allow Precision Pine to operate on a sale that was not part of its tentative plan, or requiring Precision Pine to operate on a sale because it had been identified on Precision Pine's tentative plan (PPFF 1243); and the clause contains no requirement that the Forest Service concur in any change to the anticipated schedule. Id. As Mr. Porter testified, after the submission of an annual operating schedule Precision Pine would continue to bid on timber sales and sometimes would begin harvesting on a new contract that was not even part of its portfolio at the time that its annual operating schedule was submitted. Tr. 263-64 (Porter). For example, on April 13, 1995, Precision Pine was awarded the Brookbank sale and began harvesting the contract in June of 1995.23 PPFF 344. Given the above, it is simply not possible to "misrepresent" something that neither party believed would ultimately be followed. These facts notwithstanding, defendant now claims that it nevertheless "relied" on the operating schedule. D's Br. at 33-34. Given the above, this is highly doubtful and to the extent that it did, its

Mr. Porter testified that the harvest schedule was tentative, an "estimate of an estimate" that neither Precision Pine nor the Forest Service relied upon. Tr. 263-65, 1629-30. Indeed, the tentative harvest schedule could not be accurate because, as Mr. Porter testified, he frequently reassessed the situation on his sales and made changes to the harvest schedule as events warranted such as weather, termination dates of the contracts, proximity of the sales to sawmills, elevation of the sales. That is, the 1995 harvest schedule cited by defendant, DX 294, was submitted by Mr. Smith, whose duties did not cover all of Precision Pine's sawmills (Tr. 1231-32 (Porter)) and addresses sales located on just two of the four National Forests on which plaintiff's sales were located. Obviously, these operations were not included in Precision Pine's 1995 pre-season harvest schedule (DX 294), yet, Precision Pine conducted a pre-work meeting with the Forest Service at which time its 1995 operations on the Brookbank sale were approved. In this same regard, Precision Pine was not awarded the Kettle sale until July 20, 1995 and, therefore, harvest of this sale simply could not have appeared on any harvest schedule prepared prior to that. 17
23 22

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