Vol. 8, No. 4, Pg. 40. Cisson and D&D Leasing: Exceptions to the Duty to Mitigate Breach of Contract Damages.

• Author: By Matthew Dove

South Carolina Lawyer

1997.

Vol. 8, No. 4, Pg. 40.

Cisson and D&D Leasing: Exceptions to the Duty to Mitigate Breach of Contract Damages

40CISSON AND D&D LEASING: EXCEPTIONS TO THE DUTY TO MITIGATE BREACH OF CONTRACT DAMAGESBy Matthew DoveTraditionally in South Carolina, as in most states, the only damages recoverable in a breach of contract action are those that could not have been reasonably avoided. This is the doctrine of mitigation of damages or avoidable consequences.

The doctrine generally requires the nonbreaching party to mitigate its damages by minimizing the losses it sustains as a result of any breach. This rule has normally been applied regardless of any intent of the non-breaching party to increase damages. The breaching party simply had to show that damages could have been reduced by reasonable means.

Two recent decisions by the South Carolina Court of Appeals have significantly reduced the number of cases where the nonbreaching party is required to mitigate its damages. Each opinion was authored by Judge Jasper Cureton, both were unanimous and the concurring judges were different in each opinion. Both cases held that a valid liquidated damages provision in a contract eliminates the requirement of mitigating damages.

The duty to mitigate damages applies to an action for breach of contract in South Carolina. U.S. Rubber Co. v. White Tire Co., 231 S.C. 84, 97 S.E.2d 403 (1956). The duty to mitigate, or the doctrine of avoidable consequences, prevents a party from recovering damages that it could have reasonably avoided. McClary v. Massey Ferguson, Inc., 291 S.C. 506, 40 511, 354 S.E.2d 405, 408 (Ct. App. 1987). The Court of Appeals strayed from this established rule in Cisson Construction, Inc. v. Reynolds & Associates, Inc., 311 S.C. 499, 429 S.E.2d 847 (Ct. App. 1993) and D&D Leasing Co. v. David Lipson, Ph.D., P .A., 305 S.C. 540, 409 S.E.2d 794 (1991). Both cases held that a liquidated damages provision controlled and that the nonbreaching party had no duty to mitigate its damages.

Cisson involved a breach of a note and guaranty, both of which provided remedies to the holder. 429 S.E.2d at 850. The court determined that where a contract prescribes a remedy in liquidated damages, the party having the contractual remedy available to it may proceed under the contract and does not have to mitigate its damages...