Indiana Michigan Power Co. v. U.S.

• Decision Date: 09 September 2005
• Docket Number: No. 04-5122.,04-5122.
• Parties: INDIANA MICHIGAN POWER COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

422 F.3d 1369

INDIANA MICHIGAN POWER COMPANY, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

No. 04-5122.

United States Court of Appeals, Federal Circuit.

September 9, 2005.

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Alexander D. Tomaszczuk, Shaw Pittman LLP, of McLean, Virginia, argued for plaintiff-appellant. With him on the brief were Jay E. Silberg, Devon E. Hewitt, Michael G. Lepre, Daniel S. Herzfeld, and Jack Y. Chu, of Washington, DC.

Harold D. Lester, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General and David M. Cohen, Director. Of counsel on the brief were John C. Ekman, Heide R. Herrmann, and Marian E. Sullivan, Trial Attorneys. Also, of counsel was Scott Damelin. Of counsel on the brief was Jane K. Taylor, Attorney, Office of General Counsel, United States Department of Energy, of Washington, DC.

Jerry Stouck, Spriggs & Hollingsworth, of Washington, DC, for amici curiae Yankee Atomic Electric Company, et al. Richard W. Oehler, Perkins Coie LLP, of Seattle, Washington, for amicus curiae Wisconsin Electric Power Company. With him on the brief were Martin P. Willard and Donald J. Carney, of Washington, DC; Ronald A. Schechter, Amold & Porter LLP, of Washington, DC, for amici curiae Southern Nuclear Operating Company, et al. With him on the brief was Robert L. Shapiro; Howard N. Cayne, Arnold & Porter LLP, of Washington, DC, for amicus curiae Sacramento Municipal Utility District. With him on the brief was Timothy R. Macdonald; and Norman M. Hirsch, Jenner & Block LLP, of Chicago, Illinois, for amici curiae Energy Northwest, et al. With him on the brief was David Jimenez-Ekman.

Joseph M. Perillo, Fordham Law School, of New York, New York, for amici curiae The Detroit Edison Company, et al.

Before MAYER, LOURIE, and BRYSON, Circuit Judges.

MAYER, Circuit Judge.

Indiana Michigan Power Co. ("Indiana Michigan") appeals the judgment of the United States Court of Federal Claims, Indiana Michigan Power Co. v. United States, 60 Fed.Cl. 639 (2004), dismissing its damages claims against the United States Department of Energy ("DOE" or "government") for breach of contract. We affirm.

Background

This action is one of several filed by the nation's nuclear electric utilities in the Court of Federal Claims seeking damages arising from the government's failure to accept and dispose of spent nuclear fuel ("SNF"). The general factual background of the contracts and circumstances surrounding SNF cases have been well outlined in the trial court's opinion, as well as in opinions by this and other courts. See Me. Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1337-40 (Fed.Cir.2000); Ind. Mich. Power Co. v. Dep't of Energy, 88 F.3d 1272, 1273-74 (D.C.Cir.1996). Therefore, only the facts necessary for an understanding of the issues that give rise to this appeal are discussed.

Under the Nuclear Waste Policy Act ("NWPA"), Pub.L. No. 97-425, Title III, § 302, 96 Stat. 2257 (Jan. 7, 1983) (codified at 42 U.S.C. § 10222 (2000)), Congress directed DOE to "enter into [Standard Contracts with all entities that] generate[] or hold[] title to high-level radioactive waste, or spent nuclear fuel, of domestic origin for the acceptance of title, subsequent transportation, and disposal of such waste or spent fuel" in consideration for initial and recurring annual fees, with removal to begin no later than January 31, 1998. Seeking to avoid the inefficient and potentially unsafe prospect of allowing individual utilities to recycle or dispose of their own SNF, Congress enacted the NWPA to "establish the Federal responsibility, and a definite Federal policy, for the disposal of" spent nuclear fuel. Roedler v. Dep't of Energy, 255 F.3d 1347, 1350 (Fed.Cir.2001) (quoting 42 U.S.C. § 10131(b)(2) (2000)). Nuclear plant operators and utilities were mandated by Congress to enter into Standard Contracts, the terms of which are presented at 10 C.F.R. § 961.11, as a prerequisite to obtaining renewal of their operating licenses. 42 U.S.C. § 10222(a)(1); Maine Yankee, 225 F.3d at 1337 ("The [NWPA] effectively made entry into such contracts mandatory for the utilities[.]").

On June 14, 1983, Indiana Michigan entered into a Standard Contract with DOE, under which removal of SNF from its Bridgman, Michigan, nuclear plant was to begin in 2001.¹ In 1994, DOE announced that it would not begin SNF collection until 2010 because its planned storage repository would not be ready until then. Notice of Inquiry, Office of Civilian Radioactive Waste Management: Waste Acceptance Issues, 59 Fed.Reg. 27,007-27,008 (May 25, 1994). One year later, DOE asserted that it had neither a statutory nor contractual obligation to accept the utilities' nuclear waste in the absence of such repository or temporary storage facility. Maine Yankee, 225 F.3d at 1338 (citing Final Interpretation of Nuclear Waste Acceptance, 50 Fed.Reg. 21,793 (1995)).

On June 8, 1998, the utility sued the government for partial breach of the Standard Contract in the Court of Federal Claims, asking damages for: pre-breach mitigation costs, totaling $23.9 million, incurred for its 1989 through 1994 rerack² and expansion of its existing SNF pool in 1993 and 1994; and future damages, totaling $83.8 million, for forecasted investment in the construction of a private storage facility for housing SNF not collected by DOE by the contracted-for collection start date. In light of this court's decisions holding DOE liable for breach of contract in SNF cases in Maine Yankee, 225 F.3d at 1342, and Northern States Power Co. v. United States, 224 F.3d 1361, 1367 (Fed.Cir.2000), the trial court entered judgment for Indiana Michigan on the issue of liability on January 17, 2003. Ind. Mich. Power Co. v. United States, No. 98-486C (Fed.Cl. Jan. 17, 2003). The trial court subsequently denied Indiana Michigan's claimed damages, holding that, because Indiana Michigan claimed partial versus total breach, recovery for pre-breach mitigation costs and present recovery for future damages is precluded. Indiana Michigan appeals, and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

Discussion

We review the Court of Federal Claims's decision de novo for errors of law and for clear error on findings of fact. See Glendale Fed. Bank, FSB v. United States, 239 F.3d 1374, 1379 (Fed.Cir.2001). "A finding may be held clearly erroneous when ... the appellate court is left with a `definite and firm conviction that a mistake has been committed.'" In re Mark Indus., 751 F.2d 1219, 1222-23 (Fed.Cir.1984) (citations omitted).

The remedy for breach of contract is damages sufficient to place the injured party in as good a position as it would have been had the breaching party fully performed. San Carlos Irrigation & Drainage Dist. v. United States, 111 F.3d 1557, 1562 (Fed.Cir.1997). "[T]he general principle is that all losses, however described, are recoverable." Restatement (Second) of Contracts § 347 cmt. c (1981). Damages for a breach of contract are recoverable where: (1) the damages were reasonably foreseeable by the breaching party at the time of contracting; (2) the breach is a substantial causal factor in the damages; and (3) the damages are shown with reasonable certainty. Energy Capital Corp. v. United States, 302 F.3d 1314, 1320 (Fed.Cir.2002). While the amount of damages need not be "ascertainable with absolute exactness or mathematical precision[,]" recovery for speculative damages is precluded. San Carlos Irrigation & Drainage Dist., 111 F.3d at 1563 (citation omitted).

I.

Indiana Michigan argues that its rerack and investment in the temporary holding facility were done to mitigate the government's partial breach. The government argues that the only way Indiana Michigan could recover the costs for its pre-breach activities would be under the doctrine of anticipatory repudiation, a claim it avers Indiana Michigan has waived. Alternatively, it simply argues that the trial court applied the correct rule of law when it announced a per se ban on recovery of pre-breach mitigation damages for partial breach claims.

A.

We agree with the trial court that Indiana Michigan is not here alleging anticipatory repudiation of the entire contract, but bases its claim on partial breach. Insofar as the government raises its anticipatory breach theory in support of the trial court's finding that Indiana Michigan is not entitled to recovery,³ its argument fails. First, neither the trial record, see Indiana Michigan, 60 Fed.Cl. at 648 n. 21 ("[Appellant] did not claim anticipatory breach, despite frequent discussions on the issue during trial."), nor Indiana Michigan's briefs contain a claim for a total anticipatory breach. Second, contrary to the government's assertion, the nature of Indiana Michigan's action does not lend itself to the moniker of anticipatory repudiation. An anticipatory repudiation is a "renunciation of a contractual duty before the time fixed in the contract for ... performance[.]" Franconia Assocs. v. United States, 536 U.S. 129, 143, 122 S.Ct. 1993, 153 L.Ed.2d 132 (2002) (emphasis and alteration in original) (internal quotation and citation omitted). For an aggrieved party to recover damages for an anticipatory repudiation, it must elect to treat the repudiation as a total breach. See id. On the other hand, "[i]f the injured party elects to or is required to await the balance of the other party's performance under the contract, [its] claim is said instead to be one for damages for partial breach." Restatement (Second) of Contracts § 236 cmt. b (1981). A partial breach is "[a] claim for damages ... based on only part of the injured party's remaining rights to performance." Id. § 236(2).

Here, Indiana Michigan could not have claimed anticipatory repudiation even if it wanted to; while the government did indicate that it...