Trans-Western Petroleum, Inc. v. U.S. Gypsum Co.Annotate this Case
Trans-Western filed an amended complaint in federal district court asserting claims against U.S. Gypsum for breach of an oil and gas lease and breach of the covenant of quiet enjoyment. The district court found that U.S. Gypsum had wrongfully rescinded the lease and that the rescission constituted a breach of contract and a breach of the covenant of quiet enjoyment. The court awarded nominal damages of one dollar to Trans-Western. The parties appealed. The Tenth Circuit Court of Appeals certified to the Supreme Court the question of how to measure expectation damages for the breach of an oil and gas lease. The Supreme Court answered (1) expectation damages for the breach of an oil and gas lease are measured in much the same way as expectation damages for the breach of any other contract; (2) damages may include general and consequential damages; and (3) trial courts may allow the use of post-breach evidence to help establish and measure expectation damages.