## Facts

- A seller agreed to sell a condominium in Indianapolis to buyers for $315,000 with $5,000 earnest money, with inspection-based termination allowed only for “major defects,” not “routine maintenance” or “minor repairs.”
- An inspection showed electricity was not flowing to three outlets; the buyers demanded repair by a deadline, treated the issue as a “major defect,” and conditioned performance on the seller’s timely compliance.
- The seller did not meet the buyers’ deadline; the buyers terminated the agreement, and the seller sued for specific performance or damages.
- In an earlier appeal on liability, the buyers were found to have breached by unreasonably treating the electrical issue (a minor repair) as a major defect justifying termination.
- Shortly after termination, an electrician corrected the outlet issue by resetting outlets and changing a light bulb; the cost was $117.
- As the market declined, the seller received a $240,000 offer in 2007, countered at $286,000, and the buyer walked away; the condominium ultimately sold in 2011 for $180,000 after years of carrying costs.
- On remand for damages, the trial court awarded the seller $93,972 plus attorney fees, reducing damages in part based on a finding that the seller failed to mitigate by rejecting the 2007 offer.
- A second appellate decision reduced damages to $117 on the theory that the seller could have avoided virtually all loss by complying with the buyers’ original repair demand and preserving the contract.

## Issues

1. Whether the seller’s duty to mitigate required compliance with the buyers’ unreasonable repair demand in order to preserve the original contract and avoid loss.
2. Whether the trial court acted within its discretion in finding the seller failed to mitigate by rejecting the 2007 $240,000 offer and holding out for a higher price.

## Decision

- The Indiana Supreme Court affirmed the trial court’s damages and attorney-fee awards and vacated the appellate reduction of damages to $117.
- The court held the trial court did not abuse its discretion by declining to treat “yielding to the buyers’ breach” as required mitigation.
- The court held the trial court acted within its discretion in finding the seller failed to mitigate by not accepting the 2007 offer and instead waiting to sell for less years later.
- The court reinstated the trial court’s overall damages calculation (about $93,972 plus fees).

## Legal Principles

- Contract damages may be reduced for losses that a non-breaching party could have avoided through reasonable post-breach conduct.
- The duty to mitigate requires reasonable steps to limit damages after breach; it does not require surrender of contractual rights or capitulation to an unreasonable position that constitutes the breach.
- Whether mitigation efforts were reasonable is primarily a fact question; damages and mitigation determinations are reviewed deferentially for abuse of discretion, and appellate courts should not reweigh evidence.

## Conclusion

The court held that mitigation is limited to reasonable steps to reduce post-breach loss and does not obligate the non-breaching seller to comply with the breaching buyers’ unreasonable demands, while affirming a trial court’s discretionary reduction of damages where the seller unreasonably rejected a realistic opportunity to resell.


Fischer v. Heymann, 12 N.E.3d 867 (Ind. 2014)