New Valley Corp. v. United States

Facts

Plaintiff wanted to launch two communications satellites. Plaintiff contracted with Defendant to launch the satellites. Defendant launched the first satellite. Several months prior to the scheduled launch date for the second satellite, the Space Shuttle Challenger exploded. In response to the explosion, Defendant advised Plaintiff that it had decided to suspend planning for the satellite launch. The government eventually implemented a policy restricting Defendant’s launch services to satellites. Defendant informed Plaintiff that Defendant would not be able to launch Plaintiff’s satellite prior to the expiration of their contract. Plaintiff attempted to find alternative launch options, to no avail. During the same period, Plaintiff faced severe financial difficulty. Plaintiff began selling off assets, including the satellite that was intended to be launched by Defendant for a significant loss. Plaintiff sued Defendant for breach of contract. The parties’ contract limited any award for a breach of contract to direct damages. The trial court dismissed Plaintiff’s claim. The appellate court remanded, holding that Defendant was liable for breach of contract.

On remand, Plaintiff argued that it was ready and able to perform the contract on the day the breach occurred. Defendant argued that the relevant date that should be used to determine Plaintiff’s capacity to perform the contract should be the date of the scheduled launch. Defendant argued that, even absent the breach of contract, Plaintiff’s deteriorating financial condition would have prevented Plaintiff from being able to launch the satellite. Plaintiff argued that Defendant was still liable for the difference between the value of the satellite with Defendant’s contract, and the actual sale price of the satellite. Both parties moved for summary judgment.