Free Response to Motion - District Court of Federal Claims - federal

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No. 98-614C (Senior Judge Merow) IN THE UNITED STATES COURT OF FEDERAL CLAIMS SOUTHERN NUCLEAR OPERATING COMPANY, ALABAMA POWER COMPANY, GEORGIA POWER COMPANY, Plaintiffs, v. UNITED STATES, Defendant. ______________________________________________________________________________ DEFENDANT'S RESPONSE TO PLAINTIFFS' MOTION FOR AN ORDER REGARDING SUBSEQUENT DAMAGES ACTIONS AND REQUEST FOR EXPEDITED CONSIDERATION AND CROSS-MOTION FOR SUMMARY JUDGMENT REGARDING PRE-BREACH AND FUTURE DAMAGES OF COUNSEL: JANE K. TAYLOR Office of General Counsel U.S. Department of Energy 1000 Independence Ave., S.W. Washington, D.C. 20585 JOHN C. EKMAN HEIDE L. HERRMANN Trial Attorneys Commercial Litigation Branch Civil Division Department of Justice Washington, D.C. 20530 PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director HAROLD D. LESTER, JR. Assistant Director MARIAN E. SULLIVAN Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 305-7562 Fax: (202) 307-2503 Attorneys for Defendant

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TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii INDEX TO THE APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii DEFENDANT'S RESPONSE TO PLAINTIFFS' MOTION FOR AN ORDER REGARDING SUBSEQUENT DAMAGES ACTION AND REQUEST FOR EXPEDITED CONSIDERATION AND CROSS-MOTION FOR SUMMARY JUDGMENT REGARDING PRE-BREACH AND FUTURE DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 I. II. SOUTHERN NUCLEAR SEEKS TO RECOVER DAMAGES FOR A PARTIAL, RATHER THAN TOTAL, BREACH OF CONTRACT . . . . . . . . . . 3 SOUTHERN NUCLEAR CAN RECOVER ONLY FOR PARTIAL BREACHES THAT HAVE OCCURRED AS OF THE FILING OF ITS COMPLAINT . . . . . 4 A. B. III. DOE's Continuing Breaches Are Tied To The Failure To Accept SNF In Accordance With The Approved DCSs With Individual Utilities . . . . . . . 4 Performance In 2010 Has Not Been Established As An Independent Contractual Commitment Pursuant To The Standard Contract . . . . . . . . . 9

BECAUSE SOUTHERN NUCLEAR SEEKS CONTINUED PERFORMANCE OF THE STANDARD CONTRACT, SOUTHERN NUCLEAR CANNOT RECOVER DAMAGES FOR COSTS THAT WERE INCURRED PRIOR TO DOE'S PARTIAL BREACHES OF CONTRACT OR AFTER THE DATE THAT ITS COMPLAINT WAS FILED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 A. B. The Measure Of Damages For A Partial Breach Of Contract Differs From That For A Total Breach Of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Because Southern Nuclear Has Elected To Pursue Damages For A Partial Breach Of Contract, Rather Than A Total Breach, It Cannot Recover Damages That Pre-Date The Actual Breach . . . . . . . . . . . . . . . . . . . . . . 16 1. Under A Partial Breach Claim, A Plaintiff Cannot Rely Upon An Anticipatory Partial Repudiation Theory To Recover Damages That Precede The Actual Partial Breach . . . . . . . . . . . . . . . . . . . 16

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2.

Southern Nuclear Cannot Circumvent The Legal Bar To Recovery Of Its Pre-Breach Damages By Formulating Them As Costs Incurred In The Exercise Of Its Duty Of Mitigation . . . . . . . . . . 22

C. IV.

Southern Nuclear Also Cannot Recover As Damages Costs Incurred After The Date That Its Complaint Was Filed . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 BY REQUESTING THE ABILITY TO RETURN TO THE COURT WITH FUTURE CLAIMS, SOUTHERN NUCLEAR RECOGNIZES THE LIMITATIONS UPON ITS ABILITY TO RECOVER FUTURE OR PROSPECTIVE DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 A. Southern Nuclear, In Seeking To "Split" Its Claims, Recognizes That It Cannot Now Litigate The Damages Arising From Future Partial Breaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 The Court Need Not Retain Jurisdiction Or Toll The Statute Of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

B.

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

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TABLE OF AUTHORITIES FEDERAL CASES Alder Terrace, Inc. v. United States, 161 F.3d 1372 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Alyeska Pipeline Service Co. v. United States, 688 F.2d 765 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Ammex, Inc. v. United States, 334 F.3d 1052 (Fed. Cir. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Apex Pool Equipment Corp. v. Lee, 419 F.2d 556 (2d Cir. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Barron Bancshares, Inc. v. United States, 366 F.3d 1360 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Brown v. United States, 3 Cl. Ct. 409 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Brunswick Corp. v. Sheridan, 582 F.2d 175, 183 (2d Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Caguas Central Savings Bank v. United States, 215 F.3d 1304 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Cherokee Nation of Oklahoma v. United States, 23 Cl. Ct. 735 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Christopher Village, L.P. v. United States, 360 F.3d 1319 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Cities Service Helex, Inc. v. United States, 211 Ct. C 543 F.2d 1306 (1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 21 City of Fairfax, Va. v. Washington Metropolitan Area Transit Authority, 582 F.2d 1321 (4th Cir. 1978), cert. denied, 440 U.S. 914 (1979) . . . . . . . . . . . . . . 18, 27 Container Transportation International, Inc. v. United States, 468 F.2d 926, 199 Ct. 713 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

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Danzig v. AEC Corp., 224 F.3d 1333 (Fed. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Dittmore-Freimuth Corp. v. United States, 390 F.2d 664 (Ct. Cl. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Dunkin Donuts of America, Inc. v. Minerva, Inc., 956 F.2d 1566 (11th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Everett Plywood Corp. v. United States, 206 Ct. Cl. 244, 512 F.2d 1082 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Franconia Associates v. United States, 536 U.S. 129 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 18, 21 Frazer v. United States, 288 F.3d 1347 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Hansen Bancorp, Inc. v. United States, 367 F.3d 1297 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Hansen Bancorp, Inc. v. United States, 53 Fed. Cl. 92 (2002), vacated and remanded on other grounds, 367 F.3d 1297 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Indiana Michigan Power Co. v. United States, 60 Fed. Cl. 639 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Juice Farms Inc. v. United States, 68 F.3d 1344 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Lovink v. Guilford Mills, Inc., 878 F.2d 584 (2d Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 15 Lucente v. IBM Corp., 310 F.3d 243 (2d Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 19, 20 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

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Middleton v. United States, 175 Ct. Cl. 786 (1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Mobil Oil Exploration v. United States, 530 U.S. 604 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Nager Electric Co. v. United States, 177 Ct. Cl. 234, 368 F.2d 847 (1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 PVI, Inc. v. Ratiopharm, 253 F.3d 320 (8th Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Pinewood Realty Ltd. P'ship v. United States, 223 Ct. Cl. 98, 617 F.2d 211 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 21 Quick v. American Steel & Pump Corp., 397 F.2d 561 (2d Cir. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Reynolds v. United States, 141 Ct. Cl. 211, 158 F. Supp. 719 (1958) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Robinson v. United States, 305 F.3d 1330 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Roboserve, Inc. v. Kato Kagaku Co., 78 F.3d 266 (7th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Roehm v. Horst, 178 U.S. 1 (1900) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 18 S&R Corp. v. Jiffy Lube International, Inc., 968 F.2d 371 (3d Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 San Carlos Irrigation & Drainage District v. United States, 23 Cl. Ct. 276 (1991), aff'd, 111 F.3d 1557 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . 11, 28 Tennessee Valley Authority v. United States, 60 Fed. Cl. 665 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

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Tretchick v. Department of Transportation, 109 F.3d 749 (Fed. Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 United States v. Dekonty Corp., 109 F.3d 749 (Fed. Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Wisconsin Power & Light Co. v. Century Indemnity Co., 130 F.3d 787 (7th Cir.1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Yankee Atomic Electric Co. v. United States, No. 98-126C, 2004 WL 1535688 (Fed. Cl. June 28, 2004) . . . . . . . . . . . . . . 24, 25, 29, 31 Young Engineers, Inc. v. United States International Trade Commission, 721 F.2d 1305 (Fed. Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 STATE CASES Coughlin v. Blair, 41 Cal. 2d 587, 262 P.2d 305 (1953) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 30 Kaiser v. Northwest Shopping Ctr., Inc., 587 S.W.2d 454 (Tex. Civ. Ct. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26, 29

Keefe Co. v. Americable International, Inc., 755 A.2d 469 (D.C. Ct. App. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 May v. Morganelli-Heumann &Associates, 618 F.2d 1363 (9th Cir. 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 FEDERAL STATUTES AND REGULATIONS 28 U.S.C. § 2501 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 10 C.F.R. § 961.11 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim MISCELLANEOUS 4 A. Corbin, Corbin on Contracts § 972 (1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 9 A. Corbin, Corbin on Contracts § 946 (interim ed. 1979) . . . . . . . . . . . . . . . . . . . . . . 12, 13, 14 9 A. Corbin, Corbin on Contracts § 950 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 9 A. Corbin, Corbin on Contracts § 956 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 26 vi

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9 A. Corbin, Corbin on Contracts § 972 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Restatement (First) of Contracts § 313 (1932) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 29 Restatement (Second) of Contracts § 236 (1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13, 18, 26 Restatement (Second) of Contracts § 253 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 18, 27 Restatement (Second) of Contracts § 350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Restatement (Second) of Judgments § 26 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 26

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INDEX TO THE APPENDIX Document Pages

Letter from M. Detmer, Contracting Officer, to Ronald G. Cocherell, Southern Nuclear Operating Company, dated March 4, 1992, attaching Instructions for Completing the Appendix C Delivery Commitment Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Excerpt of Trial Testimony of Christopher Kouts in Yankee Atomic Electric Co. v. United States, No. 98-126C, August 2, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Excerpt of Civilian Radioactive Waste Management System Requirements Document, Rev. 05, January 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Excerpt of H.R. Rep. No. 108-212, "Energy and Water Development Appropriations Bill, 2004," July 16, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Order, Tennessee Valley Authority v. United States, No. 01-249C, August 12, 2004 . . . . . . . . 20

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