Diversified Energy, Inc. v. Tennessee Valley Authority

*The Honorable Jennifer B. Coffman, United States District Judge for
the Eastern and Western Districts of Kentucky, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0266P (6th Cir.)
File Name: 03a0266p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
DIVERSIFIED ENERGY, INC.,
Plaintiff-Appellee/
Cross-Appellant,
v.
TENNESSEE VALLEY
AUTHORITY,
Defendant-Appellant/
Cross-Appellee.
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Nos. 01-6043/6100
Appeal from the United States District Court
for the Eastern District of Tennessee at Knoxville.
No. 97-00223—Thomas G. Hull, District Judge.
Argued: March 13, 2003
Decided and Filed: August 1, 2003
Before: CLAY and ROGERS, Circuit Judges; COFFMAN,
District Judge.*
2 Diversified Energy v.
Tenn. Valley Authority
Nos. 01-6043/6100
_________________
COUNSEL
ARGUED: Peter K. Shea, TENNESSEE VALLEY
AUTHORITY, Knoxville, Tennessee, for Appellant. Herbert
S. Sanger, Jr., WAGNER, MYERS & SANGER, Knoxville,
Tennessee, for Appellee. ON BRIEF: Peter K. Shea, Edwin
W. Small, TENNESSEE VALLEY AUTHORITY,
Knoxville, Tennessee, for Appellant. Herbert S. Sanger, Jr.,
WAGNER, MYERS & SANGER, Knoxville, Tennessee,
Martin B. Bailey, HUNTON & WILLIAMS, Knoxville,
Tennessee, for Appellee.
_________________
OPINION
_________________
COFFMAN, District Judge. This appeal, involving a
dispute between the Tennessee Valley Authority (“TVA”) and
one of its former coal suppliers, raises three questions:
(1) whether the district court erred in determining that it had
subject matter jurisdiction, pursuant to the Contract Disputes
Act of 1978 (“CDA”), 41 U.S.C. § 601 et seq., over the
plaintiff’s claim for lost profits; (2) whether the district court
properly concluded, under standard principles of contract law,
that the plaintiff is not entitled to recover damages based on
a contract price/market price differential; and (3) whether the
unappealed February 27, 2001, administrative decisions
which denied the plaintiff’s claims for actual damages are
entitled to res judicata effect. For the reasons that follow, we
AFFIRM the district court’s judgment.

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Nos. 01-6043/6100 Diversified Energy v.
Tenn. Valley Authority
3
1This is the second ap peal of this case; the factual background is
more fully summarized in the Court’s prior opinion, Diversified Energy,
Inc. v. TVA, 223 F.3d 32 8 (6th Cir. 2000) (hereinafter, “Diversified I”).
2The reopener provision provided:
[T]his contra ct shall continue through March 27 , 1996 , unless
terminated by agreement or as otherwise nego tiated herein.
Provided, however, this contract may be reopened by either
party three (3) months prior to March 19, 19 93 . . . for the
purpose of negotiating price and other terms and conditions of
the remaining portion of the maximum commitment . . . . If
either party exercises this reop ener it sha ll give the o ther pa rty
written notice by December 19, 1992 . If the reopener provision
has been exercised, this contract will terminate on March 19,
1993, unless TVA and the Contractor [i.e., Diversified] have
mutually agreed in writing by M arch 1 9, 19 93, to continue this
contract. Neither party shall be under any obligation or liab ility
to extend this contract if either p arty desires to terminate
deliveries.
I. Factual Background
For a second time, these parties bring their dispute to this
Court.1 On August 18, 1990, the plaintiff, Diversified
Energy, Inc. (“Diversified”), and the defendant, TVA, entered
into a long-term coal supply contract (the “Contract”) under
which Diversified was to provide TVA with 10,000 tons of
coal per week through March 27, 1996. Diversified was
authorized to obtain and deliver coal from only one source --
the Sigmon Coal Company (“Sigmon”). In accordance with
its agreement with Sigmon, Diversified was to pay Sigmon
the full purchase price, less a commission of $.98 per ton.
The Contract contained a “reopener” provision which entitled
either party to reopen the Contract at its midpoint to negotiate
price and other terms.2 By letter dated December 14, 1992,
TVA invoked that provision but refused to negotiate with
Diversified because Diversified had allegedly violated the
4 Diversified Energy v.
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Nos. 01-6043/6100
3This “Officials not to Benefit” provision read:
[N]or shall the C ontractor offer or give, direc tly or indirectly, to
any officer, em ployee, special Government employee, or agent
of TV A any gift, gratuity, favor, entertainment, loan, or any
other thing of monetary value, except as provided in 18 C.F.R.
§ 1300.735-12 or -34. Breach of this provision shall constitute
a material breach of this contract and TV A shall have the right
to exercise all remed ies pro vided in this contract or at law.
4Pursuant to the CDA , a contractor and the contracting government
agency must submit disputes to a Contracting Officer. If the parties are
unab le to resolve their claims by agreement, the Contracting Officer may
issue a decision on the dispute. The terms of the instant Contract, as well
as TV A’s implementing regulations, have altered this administrative
scheme slightly by requiring that any dispute which cannot be settled by
the parties shall be decided by a Disputes Contracting Officer, rather than
a Contracting Officer. Under this scheme, a Contracting Officer’s role is
to receive claims from a contractor and to raise claim o n TVA ’s behalf.
A Disputes Contracting Officer’s sole function is to dec ide claims. See
Diversified I, 223 F.3d at 332.
“Officials not to Benefit” provision3 of the Contract by giving
a $10,000 loan, a telephone calling card, and college football
tickets to a TVA employee in exchange for confidential
information. Furthermore, by letter dated March 19, 1993,
TVA’s Vice-President of Fossil Fuels, Gregory Vincent,
explained that TVA considered the Contract terminated and
that it would not extend the Contract or accept any further
deliveries of coal from Diversified. In response, Diversified
exercised its rights to initiate a dispute under the Contract’s
“Disputes” clause, which made the Contract subject to the
CDA and to TVA’s implementing regulations.4 On May 18,
1993, Diversified submitted a certified breach of contract
claim to a Contracting Officer requesting “a determination
that [it] is entitled to recover from TVA the amount which [it]
would have made from delivery of the remaining portion of
the maximum commitment under the Contract.” Diversified
specifically claimed in its letter that this amount was
$21,980,000, representing the 1,570,000 tons of coal which

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Nos. 01-6043/6100 Diversified Energy v.
Tenn. Valley Authority
5
5The Contract contained a “Unilateral Termination Right” provision
which entitled TVA to terminate the Contract unilaterally upon 60 d ays’
prior written no tice. The penalty for invoking this clause was $14 per ton
of coal multiplied by the remaining number of tons scheduled for delivery
from the effective termination date through the earliest applicable date for
termination.
remained undelivered under the Contract multiplied by $14
per ton -- the amount which Diversified would have been
entitled to in liquidated damages if TVA’s conduct amounted
to a unilateral termination of the Contract.5 In a July 11,
1995, letter addressed to TVA’s Vice-President of
Purchasing, Victor King, the Disputes Contracting Officer
who would be deciding its contract claim, Diversified made
an alternative claim for damages based on the difference
between the contract price and the market price for
comparable long-term coal contracts at the time of TVA’s
March 19, 1993, repudiation letter. In its letter, Diversified
alleged that the contract price exceeded the market price by
$5.13 per ton of coal and that, therefore, it was due
approximately $8,054,100 in damages. The Disputes
Contracting Officer rejected Diversified’s contract claim, as
well as its two specific proposed measures of damages,
concluding that Diversified had violated the Officials not to
Benefit provision and that the TVA had a consequent right to
terminate the Contract.
On March 31, 1997, Diversified filed suit in district court,
appealing the Disputes Contracting Officer’s decisions. Upon
Diversified’s motion for summary judgment, the trial judge
determined that TVA had, through “inept and heavy-handed”
behavior, breached the Contract in multiple ways. The trial
court also ruled, however, that TVA’s breaches were not
tantamount to a unilateral termination of the Contract.
Moreover, the trial court determined that Diversified
committed prior material breaches of the “Officials not to
6 Diversified Energy v.
Tenn. Valley Authority
Nos. 01-6043/6100
6Vincent -- the author o f th e M arch 19, 1993, letter -- was not
authorized to act as a Contracting Officer when he alleged that Diversified
breached the “Officials not to Benefit” clause.
Benefit” provision, thereby disqualifying it from any
damages.
Diversified appealed the district court’s decisions to this
Court, arguing that the district court was precluded from
considering TVA’s defense under the Officials not to Benefit
provision because TVA’s Contracting Officer had never
raised that claim. Diversified also argued that the district
court erred in refusing to construe TVA’s conduct as a
unilateral termination of the Contract. This Court affirmed
the district court on the unilateral termination issue but
reversed with respect to TVA’s claim under the “Officials not
to Benefit” provision, concluding that the district court lacked
jurisdiction over that claim because TVA’s Contracting
Officer had never raised it. We held that the district court
could assert jurisdiction over TVA’s defensive claim only if
it had been the subject of a valid, final decision by the
contracting agency. We further held that a valid, final
decision on TVA’s claim could be made only if it had first
been raised by a Contracting Officer. However, because the
March 19, 1993, letter which first raised TVA’s “Officials not
to Benefit” claim was not written by a Contracting Officer,6
and because the Disputes Contracting Officer who later raised
that claim was not simultaneously acting as the Contracting
Officer, we determined that TVA’s claim was not properly
before the Disputes Contracting Officer. Accordingly, this
Court concluded that the district court had no power to
consider TVA’s defensive claim and remanded the case to the
district court with instructions to award damages to
Diversified on its contract claims “in accordance with
standard contract law principles.” See Diversified I, 223 F.3d
at 336-38, 340.

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7
Upon remand, Diversified first sought an award of actual
damages under the contract price-market price differential.
TVA, attempting to rely on the Court’s reasoning in
Diversified I, moved to dismiss that claim, arguing that
Diversified’s initial 1993 claim letter to the Contracting
Officer submitted only a claim for liquidated damages. On
November 6, 2000, the district court, uncertain whether
Diversified’s 1993 claim letter was sufficient to state a valid
claim for actual, non-liquidated damages, stayed the action
for 120 days “to allow for administrative consideration of
Diversified’s claim for actual damages.”
In an August 29, 2000, letter sent to Diversified, TVA’s
Vice-President of Procurement, Paul R. LaPointe, had advised
that Larry A. Mize had been assigned as the new Contracting
Officer who would be administering Diversified’s contract
claims. On November 14, 2000, Mize informed Diversified
that TVA would also be asserting a claim that Diversified had
breached the “Officials not to Benefit” Clause -- the same
claim which we ruled the district court lacked jurisdiction to
consider. Mize also asked Diversified to submit any
additional materials relevant to its contract claims, indicating
that his role was to resolve the matter by agreement. On
January 22, 2001, Diversified sent a letter to Mize specifying
that it sought actual damages as measured by the difference
between the contract price and the market price or,
alternatively, the profits it lost due to TVA’s repudiation. In
two letters dated February 27, 2001, Mize -- now also acting
as the Disputes Contracting Officer -- refused to award
Diversified either measure of damages, concluding that its
prior breach of the “Officials not to Benefit” clause precluded
it from recovering any damages.
On March 7, 2001, the district court lifted its stay. On the
same day, TVA moved for partial summary judgment on
Diversified’s claim based on the contract/market price
differential, claiming that such an award would not be
consistent with standard contract law principles because it
8 Diversified Energy v.
Tenn. Valley Authority
Nos. 01-6043/6100
would place Diversified in a better position than it would
have enjoyed had the Contract been performed fully. The
district court granted TVA’s motion, holding that
Diversified’s damages would be calculated on the basis of the
profits it would have made had the Contract been performed.
On May 23, 2001, TVA filed objections to the district court’s
jurisdiction, claiming, among other things, that Diversified
needed to amend its complaint to appeal the adverse
February 27, 2001, decisions in order for the district court to
have jurisdiction over any of its damage claims.
On June 7, 2001, Diversified moved for summary judgment
on its lost profits claim. TVA opposed the motion, alleging
(1) that the district court lacked jurisdiction over that claim
because it had not been submitted to a Contracting Officer
before Diversified filed its original complaint and because
Diversified had not been granted leave to amend its complaint
to appeal the February 27, 2001, administrative decisions
which denied that claim, (2) that expenses should be deducted
from Diversified’s claim for lost profits, and (3) that the
February 27, 2001, administrative decisions of the Disputes
Contracting Officer were entitled to res judicata effect and
precluded Diversified’s claim for any actual damages. On
July 12, 2001, the district court overruled TVA’s objections
and granted, in part, Diversified’s motion for summary
judgment. With regard to the jurisdictional issue raised by
TVA, the district judge assumed that it had power to comply
with this Court’s previous mandate that it award Diversified
damages in accordance with standard contract law principles,
characterizing the procedural posture of the case as “simply
the end-stage of Diversified’s original breach of contract
action not a new lawsuit based upon some separate set of
facts.” With respect to the lost profits claim, the district court
awarded Diversified $1,139,185 (plus interest) in actual
damages, reflecting the $.98 per ton in commissions which it
would have received from Sigmon if TVA had accepted the
remaining tons of coal, less a reduction of $.22 per ton which
Diversified had agreed to pay a third party, Billy Evans d/b/a/

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B & A Coals, for all coal delivered under the Contract.
Finally, the trial court refused to give res judicata effect to the
unappealed February 27, 2001, administrative decisions
because it believed that this Court’s prior decision precluded
it from finding -- or accepting the Disputes Contracting
Officer’s findings -- that Diversified’s breaches of the
“Officials not to Benefit” provision barred it from recovering
any damages.
II. Standard of Review
This Court reviews de novo a district court's grant of
summary judgment. Edwards v. TVA, 25 F.3d 318, 322 (6th
Cir. 2001). The existence of subject matter jurisdiction under
the CDA is also reviewed de novo. See Campanella v.
Commerce Exch. Bank, 137 F.3d 885, 891 (6th Cir. 1998).
III. Discussion
A. Jurisdiction over Diversified’s Lost Profits Claim
In this appeal, TVA renews the primary contention that it
made to the district court upon remand: that the district court
lacked jurisdiction over Diversified’s lost profits claim
because that claim had not been presented to a Contracting
Officer before Diversified filed its original complaint and
because Diversified has not amended its complaint to include
an appeal of the February 27, 2001, administrative decisions
which rejected that claim. The critical assumption underlying
TVA’s position is that Diversified’s May 18, 1993, certified
claim -- the basis of the district court’s jurisdiction when
Diversified initiated suit in 1997 -- failed to make a claim for
10 Diversified Energy v.
Tenn. Valley Authority
Nos. 01-6043/6100
7TV A’s assumption is not well-founded, as Diversified’s 199 3 claim
letter clearly stated that it believed itself “entitled to recover from TVA
the amount which [it] would have ma de from delivery of the rem aining
portion of the maximum commitment under the Contract.” This language
plainly enco mpa sses a claim for lost profits. See, e.g., Allen, H eaton &
Mc Do nald v. Castle Farm Amusement Co., 86 N .E.2d 78 2, 78 4 (O hio
1949) (“When a p laintiff sues on a contract to recover the amount he
would have received for the full performance prevented by a defendant's
breach, he seeks in effect to recover as damages the profit from
performance of the contract which profit defendant's breach prevented
him from earning.”). It is true tha t the May 18, 1993, letter states that
Diversified identified its lost profits as the amount due under the
Unilateral Termination Right clause, but Diversified did not in any way
indicate that this was the exclusive measure of damages sought. Instead,
it appears that Diversified stated a contract claim for what Diversified
“would have made,” and then understandably contended that the amount
be measured in terms of the contract’s liquid ated d amages rem edy.
lost profits, but instead stated only a claim for liquidated
damages.7
TVA asserts that Diversified’s failure to refer to lost profits
expressly in its claim letter violated its duties under the CDA,
specifically, 41 U.S.C. §§ 605(a) and 605(c)(1), to ensure that
all of its claims were submitted in writing to a Contracting
Officer and to certify that the data supporting its claims was
accurate and complete. It also claims that Diversified’s
alleged omission amounted to noncompliance with TVA’s
implementing regulations which provide, among other things,
that a contractor’s claim submittal must “[i]nclude sufficient
supporting data to permit the Contracting Officer to decide
the claim, provide appropriate reference to previously
submitted data.” 18 C.F.R. § 1308.2(c) (2003). In TVA’s
view, because Diversified did not comply with these
requirements, it did not submit a valid claim for lost profits to
the original Contracting Officer and, thus, the original
Disputes Contracting Officer did not issue a final decision
denying that claim.

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Nos. 01-6043/6100 Diversified Energy v.
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TVA, as an agency of the United States, enjoys sovereign
immunity unless Congress specifically waives it. See, e.g.,
Campanella, 137 F.3d at 890. Under the CDA, Congress has
conditionally waived the sovereign immunity of executive
agencies which contract with others for services or certain
kinds of property. See, e.g., SMS Data Products Group, Inc.
v. United States, 19 Cl. Ct. 612, 614 (Cl. Ct. 1990). With
regard to the TVA, this waiver applies only to contracts, like
the one signed by Diversified, which “contain a disputes
clause requiring that a contract dispute be resolved through an
agency administrative process.” 41 U.S.C. § 602(b). One
condition which Congress has placed upon the waiver of
TVA’s immunity under the CDA is the requirement that a
contractor exhaust the agency’s administrative procedures
before filing suit in district court. The purposes of this
condition are to encourage resolution of disputes by
negotiation prior to litigation and to “keep government
contract disputes out of the district courts.” Campanella, 137
F.3d at 890 (citing United States v. Kasler, 123 F.3d 341, 346
(6th Cir. 1997)). An additional, related condition is the
requirement that a contractor seeking more than $100,000 in
damages present a valid, certified contract “claim” to a
Contracting Officer. See 41 U.S.C. § 605(c)(1); RMI
Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125,
1135 (6th Cir. 1996). This condition serves to ensure that the
Contracting Officer is given enough information to evaluate
the claim fairly so that a final decision may be reached. E.g.,
Colon v. United States, 35 Fed. Cl. 337, 342 (1996). These
conditions are jurisdictional in nature; a failure to satisfy them
will preclude the district court from entertaining an appeal of
the contractor’s claims. See, e.g., Diversified I, 223 F.3d at
336; SMS Data Products, 19 Cl. Ct. at 615.
The CDA does not define what constitutes a “claim.”
Colon, 35 Fed. Cl. at 340. Under TVA’s regulations, that
term is defined as a “written demand by a Contractor . . . for
a decision by a Contracting Officer under a disputes clause.”
18 C.F.R. § 1308.2(c). TVA’s regulations specify further that
12 Diversified Energy v.
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Nos. 01-6043/6100
a claim must, among other things, “state the amount of
monetary relief, or the kind of nonmonetary relief, sought,”
provide “sufficient supporting data to permit the Contracting
Officer to decide the claim,” and, if greater than $100,000,
“include a signed certification by the Contractor that the claim
is made in good faith, that the supporting data are accurate
and complete to the best of the Contractor's knowledge and
belief, and that the amount requested accurately reflects the
contract adjustment for which the Contractor believes TVA
is liable.” 18 U.S.C. § 1308.2(c)(1)-(3). The term “claim” is
to be interpreted broadly to embrace virtually all disputes
arising under or relating to a government contract. See RMI
Titanium, 78 F.3d at 1135 (citing Z.A.N. Company v. United
States, 6 Cl. Ct. 298, 303 (1984)).
Under the CDA, a district court is not deprived of
jurisdiction over a contract claim merely because the
contractor changes the amount of his claim or the theory of
his damages, so long as the modified claim is “‘based on the
same set of operative facts underlying the claim’ submitted to
the contracting officer.” ThermoCor, Inc. v. United States, 35
Fed. Cl. 480, 489 (1996) (quoting Cerberonics, Inc. v. United
States, 13 Cl. Ct. 415, 417 (1987)). “The critical test is
whether the contracting officer’s right to adjudicate the claims
is undermined by circumventing his statutory role ‘to receive
and pass judgment on the contractor's entire claim.’” Id.
(quoting Cerberonics, 35 Cl. Ct. at 418). This rule recognizes
that “it would be very disruptive to a court’s procedures, if
theories, developed as a result of pretrial proceedings
including discovery, had to be submitted to the contracting
officer before the court could render a final decision on a
claim.” Id. (citing J.F. Shea Co. v. United States, 4 Cl. Ct.
46, 54 (1983)). Hence, as long as Diversified’s claim for lost
profits was based on the same operative facts as its claim for
liquidated damages and did not prevent the Contracting
Officer from evaluating whether Diversified was entitled to
such a remedy, it was properly before the district court. See
id.

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TVA contends that Diversified submitted no information
regarding its lost profits to the Contracting Officer, thus
providing him with no opportunity to make a final decision
on that claim. TVA specifically asserts that the claim for lost
profits was based on different evidence than the liquidated
damages claim. TVA’s position, however, ignores the reason
underpinning the rule enunciated in ThermoCor and
Cerberonics: as long as the contracting agency is given an
adequate opportunity to make decisions on the issues
presented by a contractor’s claim, the subsequent
modification (or clarification) of the remedy sought by the
contractor does not prejudice the contracting agency and does
not, therefore, deprive the district court of jurisdiction over
the modified claim. See, e.g., ThermoCor, 35 Fed. Cl. at 489-
90; Cerberonics, 13 Cl. Ct. at 419.
Diversified’s claim for lost profits arose from the same
operative facts which were before the Contracting Officer in
1993 -- TVA’s conduct in repudiating the Contract.
Additionally, since the original Disputes Contracting Officer
denied Diversified’s claim on the issue of liability, he
necessarily refused to award Diversified damages under any
available remedy theory. The Disputes Contracting Officer
was given an adequate opportunity to address the lost profits
claim. Therefore, the district court had jurisdiction over
Diversified’s lost profits claim when Diversified filed its
complaint in 1997. Furthermore, since its lost profits claim
was properly before the district court by virtue of its original
complaint, Diversified had no obligation to amend that
pleading to appeal the February 27, 2001, administrative
decisions. See Sharman Company, Inc. v. United States, 2
F.3d 1564, 1570 (Fed. Cir. 1993). Accordingly, the district
court’s assumption that it had jurisdiction to award
Diversified lost profits was correct.
14 Diversified Energy v.
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Nos. 01-6043/6100
8This section p rovides:
(1) Subject to subsection (2) and to the pro visions o f this Article
with respect to proof o f mark et price (Section 2-723), the
measure of damages for no n-acce ptance or repudiation by the
buyer is the difference between the market price at the time and
place for tender and the unpaid contract price together with any
incidental damages provided in this Article (Section 2-710), but
less exp enses sa ved in consequence of the buyer's breach.
(2) If the measure of damages pro vided in subsection (1 ) is
inadequate to put the seller in as good a position as performance
would have done then the me asure of damages is the profit
(including reasonable overhead) which the seller would have
made from full performance by the buyer, together with any
incidental damages provided in this Article (Section 2-710), due
allowance for costs reasonably incurred and due credit for
payments or proceeds of resale.
B. Diversified’s Claim Under the Contract/Market Price
Differential
The district court did not err in rejecting Diversified’s claim
for damages based on the $5.13 per ton difference between
the Contract price and the market price. Upon remand, this
Court instructed the district court to determine Diversified’s
damages in accordance with standard principles of contract
law. Diversified mistakenly argues here that those principles
entitled it to a measure of damages reflective of the
contract/market price differential under the Uniform
Commercial Code (“UCC”), specifically § 2-708(1).8 Even

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9It is unclear the extent to which the UCC ap plies to government
contracts. See, e.g., Technical Assistance Int’l, Inc. v. United States, 150
F.3d 1369, 1372 (Fed. Cir. 1998) (looking to the UCC for guidance, but
concluding that “the Uniform Commercial C ode is not binding with
respect to gov ernment contracts . . . .”) (citation omitted ); Northern Helix
Co. v. United States, 455 F.2d 546, 553 (Ct. Cl. 1972) (“This court has
explicitly recognized the authority and relevance of the Uniform
Commercial Code in the field of public contracts . . . .”) (citations
omitted). We need not settle this question here, however, since, even
assuming that the U CC applies, Diversified is not entitled to the relief it
claims.
assuming that the UCC applies,9 however, Diversified was
not entitled to damages under § 2-708(1).
Sigmon -- the entity which actually owned the coal -- paid
Diversified a fixed commission of $.98 for each ton of coal
delivered to TVA. Diversified was obligated to pay a portion
of those commissions, $.22 for each ton delivered, to a third
party, Billy Evans, as compensation for his assignment of the
Contract to Diversified on June 19, 1980. Hence, as indicated
in Diversified I, if TVA had performed the Contract fully,
Diversified’s maximum expectancy would have been $.76 per
ton of undelivered coal. See Diversified I, 223 F.3d at 338.
A non-breaching party is entitled to be placed in the same
position it would have enjoyed had the defendant abided by
the contract, but is not entitled to more than the benefit of his
bargain. See, e.g., San Carlos Irrigation & Drainage Dist. v.
United States, 111 F.3d 1557, 1562-63 (Fed. Cir. 1997);
Rodgers v. Fisher Body Div., Gen. Motors Corp., 739 F.2d
1102, 1107 (6th Cir. 1984). A damage award which fails to
adhere to this principle is unreasonable as a matter of law.
See Cincinnati Fluid Power, Inc. v. Rexnord, Inc., 797 F.2d
1386, 1393 (6th Cir. 1986). The UCC, including § 2-708, has
adopted this philosophy. See, e.g., Nobs Chem., U.S.A., Inc.
v. Koppers Co., 616 F.2d 212, 215 (5th Cir. 1980).
16 Diversified Energy v.
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Nos. 01-6043/6100
10As obse rved by the district court, the reopener provision allowed
either party to reopen the Contract (with certain restrictions) for the
purpo se of negotiating new terms in the event that the market price of coal
changed.
Diversified relies principally upon Trans World Metals,
Inc. v. Southwire Co., 769 F.2d 902, 908 (2d Cir. 1985) to
support its argument that it is entitled to damages under § 2-
708(1). That case is not applicable, however. Unlike the
plaintiff in Trans World Metals, Diversified did not assume
any risk that the market price of coal would increase. Rather,
any such risk was assumed, if at all,10 by Sigmon -- the only
authorized producer of the coal under the Contract.
Therefore, Diversified was not entitled to damages based on
the contract/market price differential under § 2-708(1). See
Nobs Chem., 616 F.2d at 215; see also Union Carbide Corp.
v. Consumers Power Co., 636 F. Supp. 1498, 1501-02 (E.D.
Mich. 1986). Because Diversified would have received only
$.76 per ton of coal had the Contract been performed, the
district court properly limited its damages to an amount based
on that figure.
C. The Res Judicata Effect of the February 27, 2001,
Administrative Decisions
The February 27, 2001, administrative decisions which
purported to resurrect TVA’s “Official not to Benefit” defense
and to deny Diversified’s claims were invalid from the outset
and are therefore not entitled to any preclusive effect. Where,
as here, a claim for damages under the CDA is in litigation,
a Disputes Contracting Officer has absolutely no authority to
issue a final decision on that claim. See Sharman Co. v.
United States, 2 F.3d 1564, 1571-72 (Fed. Cir. 1993), rev’d
on other grounds, Reflectone, Inc. v. Dalton, 60 F.3d 1572,
1580 (Fed. Cir. 1995) (citing Durable Metal Prods., Inc. v.
United States, 21 Cl. Ct. 41, 46 (1990)). In Sharman, there
had been no stay of judicial proceedings, and we do not hold

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Nos. 01-6043/6100 Diversified Energy v.
Tenn. Valley Authority
17
that court stays are never appropriate to permit additional
administrative proceedings under the CDA. In this case,
however, in light of our holding that the district court had
jurisdiction over Diversified’s lost profits claim when
Diversified filed its complaint in 1997, there was no need for
the district court to stay the judicial proceedings, and at least
in that context the Disputes Contracting Officer’s
February 27, 2001, decisions must be treated as entitled to no
preclusive effect.
IV. Conclusion
For the foregoing reasons, the district court’s decision is
AFFIRMED.

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