Our middle child of seven kids suffers from classic Middle Child Syndrome. She has the largest heart in the family, and yet every other minute is a moment of devastation, wrought with feelings of neglect, resentfulness and sadness. We love her and we have empathy, but—like government contractors who sometimes feel burned—there are no devastation damages available.
In Michael Johnson Logging v. USDA, CBCA 5089 (Dec. 22, 2017), a government contractor sought damages, including “business devastation” losses, under a timber sales contract with the United States Forest Department. During performance of the contract, the contracting officer suspended the contractor’s operations three times for a combined total of 27 days. Two times were imposed for cutting the wrong trees and one time was for failure to control run-off and prevent erosion. Notably, the Contractor did not challenge the suspensions at the time they were imposed, but instead took all required steps to remedy the alleged breaches.
In its certified claim to the Government, the Contractor alleged numerous components of damages:
- $741,837 for lost productivity (due to the need to use crooked skid trails and small landings);
- $22,000 for damage to equipment;
- $54,000 for inadequate skid trails;
- $52,600 for unreasonable suspensions of work;
- $91,980 lost profit on unharvested timber; and
- $150,000 business devastation damages.
While contractors may recover damages resulting from “the natural and probable consequences of the breach complained of … damages remotely or consequently resulting from the breach are not allowed.” Ramsey v. United States, 101 F. Supp. 353, 357 (Ct. Cl. 1951). Although not categorically disallowed, contractor claims for consequential damages premised on the destruction of the entire business or lost business opportunities have been denied where they failed to show a nexus between the damages claimed and the breach alleged.