Commentary: Mitigation of Damages Rule Offers Common Sense Solution
Successful parties in lawsuits seeking to recover monies are awarded damages. Most damages are generally intended to compensate parties for losses they have suffered. Typically, therefore, damages are intended to make parties whole, that is, in the same condition they would have been had they not suffered a loss at the hands of a third party.
For example, damages would compensate an owner the dollar amounts sufficient to allow the owner to have defective work of a contractor repaired or replaced. In appropriate circumstances, the owner may also recover consequential damages such as loss of rents that would have been paid to the owner if the defective work had prevented the rental of the owner’s property.
However, the law requires that parties claiming injuries must “mitigate their damages.” What that means is that they must take reasonable steps to minimize or lessen the amount of damages to which they are entitled. That is likely to require them to spend monies to have the problem fixed if they can. In that instance, they would be entitled to recover those costs.
For example, let’s assume a roof has been improperly installed by a roofer, and it leaks. To mitigate its damages, the owner would be required to use reasonable efforts to have the roof fixed, temporarily or permanently, to prevent water damage to the interior or furniture or fixtures in the building. The owner could not let the leak continue, hoping to recover, in a lawsuit or arbitration, the cost of repair or replacement of damaged interior property that could have been prevented.
The mitigation-of-damages rule requires “reasonable” steps to mitigate. In some instances, injured parties may not have funds necessary to fix the problem. In that instance, they may be legally excused from mitigating their damages.
While the mitigation-of-damages rule is really one of common sense, it is not unusual for parties to lawsuits and arbitrations to overlook or ignore theirs or their opponent’s obligations to mitigate their damages.
Albert B. Wolf is a principal in the Denver law firm of Wolf Slatkin & Madison P.C. This column was written with the intent of providing general legal information intended to be reasonably accurate although not comprehensive. Readers are therefore urged to consult their attorneys for any specific legal advice they may desire concerning the subject matter of this column.