Panel disagrees as to when woman failed to mitigate damages

By a vote of 2-1, the Indiana Court of Appeals Friday reduced nearly $94,000 in damages to just $117 after finding the seller of a condo failed to mitigate her damages after the buyers backed out of the sale over repairs. Judge Cale Bradford believed seller Gayle Fischer was entitled to the original damages award.

Michael and Noel Heymann entered into a purchase agreement to buy an Indianapolis condo from Fischer for $315,000. An inspection of the property revealed several outlets did not have power and a light did not work properly. The Heymanns believed this constituted a “major defect” as defined in their agreement that allowed them to demand Fischer to fix the issues or walk away from the deal.

The Heymanns informed Fischer of the problems Feb. 10, 2006. She asked for an extension to agree to fix the issues, but the Heymanns on Feb. 15 said she had only until Feb. 18 to respond. Fischer never responded, so the Heymanns sought to buy another condo. Fischer’s electrician did resolve the issues, which cost $117 to fix.

This case has already gone before the Court of Appeals once, and the judges found the Heymanns attempted termination of the purchase agreement was ineffective and that Fischer was owed damages. In this appeal, the issue is when Fischer failed to mitigate her damages. The Heymanns claimed that she is only entitled to the $117; Fischer wants actual and consequential damages of more than $286,000.

In Gayle Fischer v. Michael and Noel Heymann, 49A02-1204-PL-340, Judges Edward Najam and Ezra Friedlander held that the trial court findings don’t support the original $94,000 award. The evidence shows that after the Heymanns breached the purchase agreement, Fischer could have easily mitigated her damages by indicating she would make the minor electrical repairs. They ruled that whatever additional damages she may have incurred through 2007 or 2011 were caused by her own failure to mitigate in 2006. They ordered that she receive just $117, plus attorney fees commensurate with her recovery and costs.

Judge Cale Bradford believed that had Fischer assented to the inspection report response, she would have been required to make the minor repairs, but that would have been in performance of the purchase agreement, not in mitigation of damages. The contract didn’t require her to fix minor defects in the home. Instead, she failed to mitigate her damages in February 2007 when she did not accept a $240,000 offer on the condo from another buyer.

As such, she would be entitled to the nearly $94,000, which includes $75,000 in damages, more than $15,000 in carrying costs and nearly $4,000 in attorney fees, Bradford concluded.