What is the duty to mitigate damages?

The duty to mitigate damages is the duty, or obligation, on the part of a person who has suffered physical injury, property damage, or financial loss, to take action to minimize further damage, injury, or loss. A person is not allowed to stand idly by and watch further harm come to his or her property, or to otherwise passively allow additional costs or losses to occur.

Everyone must use reasonable care and diligence to minimize damages by preventing additional damage, loss, or costs. In law, “damages” means the money another party owes you due to some wrongful act on their part.

The duty to mitigate damages is the duty to minimize the amount owed to you if you are capable of doing so. In other words, if your house is on fire, you should call the emergency line to get a fire truck.

If you’re involved in a serious accident, you should seek medical treatment to avoid more serious injuries. The system asks if you took steps a reasonable person would’ve to prevent further damages.

What does a person have to do to mitigate damages?

An injured party must make a reasonable effort or expend reasonable costs to prevent the amount of loss or harm from increasing. For example, if constant rain is raising the level of a lake next to your house, as the property owner you have the responsibility to take protective steps that a reasonable person would in order to prevent the avoidable consequences and damages from the flood which is about to occur, such as moving belongings or vehicles to higher ground or putting out sandbags to prevent water from entering your home. The acts required by a person to mitigate damages are determined by the facts of the particular case and must be a “reasonable action” under the circumstances.

Whether certain acts are “reasonable” (or not) is judged by two related standards:

• Subjective standard: You should do what the hypothetical reasonable average person would do under similar circumstances;
• Cost benefit standard: If you can spend $X in mitigation costs to save $2X, $3X, or more, that would be a reasonable thing to do because your investment offers you a positive return. It is reasonable to spend money to save even more money.

This standard does account for priorities. For example, if your house is on fire, your first response might be to find family members and get them to safety or get them medical attention. The protection of life over property could be considered reasonable. Different approaches may also be taken if there’s another injured party hiring personal injury attorneys as opposed to an insurance company evaluating a claim. If an insurance company is denying your claim due to what they perceive as negligence causing additional injury, you may be the one suing them or filing appeals with the help of an attorney.

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What happens if a person fails to mitigate damages?

If a person fails to mitigate damages, their damage award – what they can get as compensation as a tort victim in a civil lawsuit – are reduced accordingly. In personal injury law, the outcome of this can vary state to state. Some states practice a harsher standard putting the bulk of the responsibility on the injured party. Did you contribute to the injury in any way? If so, the defendant may be less responsible and therefore pay less or nothing at all depending on the culpability of the injured person.

The reason that the aggrieved party is penalized in this way – by giving up or losing money to which they would otherwise be entitled – is to encourage people to do what they can to avoid excessive costs and additional losses that mitigation efforts would have prevented.

Nobody is expected to be a superhero. Generally, the courts just want to see a reasonable effort was made. If you were in an auto accident, were you wearing your seatbelt? If your house flooded, did you take reasonable steps to stop the flow of water and fix the damage? If you were bitten by a dog, were you taunting the dog or otherwise contributing to the injury? If injured persons are found to be partially responsible, there could be financial and other consequences.

How do you prove a person failed to mitigate damages?

The defendant (the person being sued) has the burden of proving that the plaintiff (the victim who filed the lawsuit) failed to mitigate damages. This is not necessarily a difficult burden. In the typical civil case, the standard of proof is by a “preponderance of the evidence,” or “more likely than not.”

Put another way, the defendant must prove that it is more likely than not that the plaintiff failed to reduce costs or the extent of personal losses when he or she reasonably could have with minimal effort. The burden of proof then falls on the plaintiff to prove they took reasonable measures.

What Are Some Examples of Mitigation of Damages?

Car Accident:

Alex sues Bob for negligence (or carelessness) for the property damage to Alex’s car resulting from an auto accident in which Bob was at fault. While Alex’s car is being repaired, Alex decides to rent a Rolls Royce and tries to recover the cost of the Rolls rental from Bob. Alex has failed to mitigate damages because a cheaper car could have been rented. Compensatory damages can only be paid on a reasonable basis. Alex will likely be limited to recovering what a reasonable alternative car would have cost to rent.

Landlord-Tenant:

A tenant has a one-year lease, but moves out of the apartment after six months and stops paying rent when there is nothing wrong with the rental. The landlord can sue the tenant for the rent due under the lease terms, but the landlord has a duty to make an effort at mitigation by making reasonable efforts to find another tenant. The landlord may not simply leave the rental unit empty while counting on suing his former tenant for the money.

Reasonable measures would include actions that other landlords in the vicinity take to attract tenants, such as advertising the property online or in the newspaper, posting a sign on the property, or retaining a rental agent. This responsibility would be mitigated if the tenant prevented the landlord from relisting the property in some way. When a new tenant rents the property, the former tenant’s obligation to pay rent ends, even though there are remaining months on the original lease.

If the landlord does nothing, the landlord has failed to mitigate damages and cannot claim damages based on the rent that would be due for the remainder of the lease. The landlord would only get rent for an amount of time equal to what the court concludes is the reasonable length of time it typically takes to find a new tenant for a unit similar to that in the rental marketplace.

For example, let’s say there are six months left on the lease, but an apartment like this one can typically be rented out in three months in that geographic area. In such a case, the landlord might only get three months of rent from his former tenant.

Home Improvement Contract:

Denise entered into a contract to have her roof repaired and, unfortunately, the contractor she hired starts the work but never completes it. Denise sues the contractor for breach of contract. Her damages include the costs to complete the work, but she hires the most expensive contractor she can find to do the work and takes no reasonable cost-avoiding steps.

Denise has failed to mitigate damages because she could have hired a contractor whose costs are reasonable and comparable to what the original contractor charged. With respect to damages, she will likely only receive compensation for the cost she should have incurred, not the unnecessarily inflated cost she did incur.

In this case, she would also be expected to take reasonable steps to get any gaps or holes in the roof closed to prevent water and other damages. If she fails to take reasonable steps to protect her property – even something as basic as putting tarps in overexposed areas – she may not be able to recover compensation for any rain damage to the interior of her home.

Unemployment Compensation:

Gary has lost his job and is receiving unemployment compensation. The Employment Development Department in Gary’s state tells him that he needs to submit evidence that he has applied for at least three jobs every week. Gary ignores that direction, and instead of looking for work, he takes a European vacation. Gary has failed to mitigate damages because applying for jobs may have resulted in employment which would have ended his need for unemployment compensation.

Therefore, the Department might cut short Gary’s unemployment benefits, or at least not let him receive benefits for the time he was on that European vacation because he was not doing what he reasonably could to reduce his losses.

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Case Studies: Duty to Mitigate Damages

Case Study 1: Property Damage Mitigation

John’s property is damaged by a severe storm, resulting in a leaking roof and water damage to the interior. Despite being aware of the damage, John fails to take any immediate action to mitigate the further spread of water or to prevent additional damage.

As a result, the water continues to cause more harm to his property. In a subsequent legal claim seeking compensation for the damages, John’s failure to mitigate may impact the amount he can recover.

Case Study 2: Injury Mitigation

Sarah is involved in a car accident where she suffers a leg injury. Despite being advised by medical professionals to undergo physical therapy and rehabilitation to minimize the long-term effects of her injury, Sarah neglects to follow through with the recommended treatment.

Her failure to mitigate damages by seeking appropriate medical care and rehabilitation may impact the amount of compensation she can claim in a personal injury lawsuit.

Case Study 3: Financial Loss Mitigation

David is wrongfully terminated from his job and decides to file a lawsuit against his former employer for lost wages and emotional distress. However, instead of actively seeking new employment opportunities to mitigate his financial loss, David chooses to remain unemployed for an extended period without making reasonable efforts to find alternative employment.

His failure to mitigate damages by seeking new job opportunities may affect the amount of compensation he can recover in his wrongful termination case.

In Summary: Mitigation of Damages 

In conclusion, taking the appropriate precautions when needed to mitigate damages is an important step in determining what loss you would have suffered if the injury had not been prevented.

As is evident from these examples, mitigation of damages means taking reasonable steps to minimize damages. Failure to do so may reduce the compensation to which you’d otherwise be entitled. 

If you are seeking recovery for property damage from an insurance company, you should seek the advice of an experienced insurance lawyer. If the property damage was due to a car accident, see a car accident lawyer right away.

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