Reclamation may owe Stockton water district millions
August 4, 2014
• Appellate Court says district is owed “expectancy damages”
• Allocation of water from New Melones Reservoir triggered initial lawsuit
The U.S. Bureau of Reclamation may owe the Central San Joaquin Water Conservation District millions of dollars for breach of contract involving water from the Bureau’s New Melones Reservoir, following a decision by the U.S. Court of Appeals for the Federal District, the court that’s seen as just below the Supreme Court in hierarchy.
In 1992, Reclamation indicated that it could not meet the quantity of water that it had earlier contracted to supply Central because of other demands for the water. Central sued the United States for breach of contract in federal district court and ultimately was awarded less than $150,000.
It was denied any expectancy damages. A simple definition of the term, from Wikipedia, is “to put the non-breaching party in the position he would have occupied had the contract been fulfilled.”
Central appealed the denial of expectancy damages, which it pegs at more than $13 million.
“We conclude that the trial court erred by not properly considering the effect of Reclamation’s announced breaches on the amount of water that Central may have expected to need to meet demand,” the appellate court says. “This caused the trial court to discount Central’s arguments regarding what would have happened in the non-breach world. Accordingly, we affirm the trial court’s judgment granting cost of cover damages but vacate the trial court’s judgment denying expectancy damages, and remand for further proceedings consistent with this opinion.”