Opinion ID: 61821
Heading Depth: 4
Heading Rank: 2

Heading: Duty to Mitigate under Federal Common Law

Text: 5 No. 06-31156 The district court also correctly found that the Gallups did not breach the common law duty to mitigate because the measures they could have taken to prevent further damage to their home following Flood I were either prohibitively expensive or insufficient to have prevented the damage from Flood II. The Gallups had a duty to mitigate their damages under the general principles of insurance law which govern the SFIP. Hanover Bldg. Materials, Inc. v. Guiffrida, 748 F.2d 1011, 1013 (5th Cir. 1984) (stating that disputes under the National Flood Insurance Act of 1968 “are resolved under federal law by drawing upon standard insurance law principles”). Under standard insurance law principles, mitigation is “the duty of insureds to do all that they reasonably can to minimize the loss.” COUCH ON INSURANCE § 168:9. Because the duty to mitigate is a common law duty, it exists “in the absence of an explicit policy provision or statutory provision imposing such a duty.” Id. § 168:11. Thus, although the mitigation provision in the SFIP does not apply to this case, the Gallups still had a common law duty to take reasonable steps to mitigate their damages. The district court found that the mitigating measures available to the Gallups following Flood I were not reasonable. The district court found that it was not reasonable for the Gallups to bulkhead the riverbank because this measure was prohibitively expensive compared to the value of the house.2 The district court also found that moving the home after Flood I, which would have cost over $85,000, was too expensive to be a reasonable mitigating measure. The district court evaluated the testimony of the witnesses for both sides and found that other mitigating measures, such as the dirt and concrete fill proposed by 2 The Gallups investigated the possibility of bulkheading prior to Flood I, and they stated that National Resource Conservation Service (“NRCS”) estimated that it would cost over $270,000 to protect their home using bulkheading. 6 No. 06-31156 Omaha following Flood I, would not have prevented the damage which occurred in Flood II. In Real Asset Management, Inc. v. Lloyd’s of London, this Court held that the plaintiff insured’s recovery should be reduced to the extent that he failed to take reasonable temporary measures, such as putting up a tarp, to prevent further damage to a building whose roof had been destroyed. 61 F.3d 1223, 1230 (5th Cir. 1995). This Court held that “[t]he defendant bears the clear burden to show what extent of [the] damages should be mitigated” and remanded the case to determine what part of the damages could be attributed to the plaintiff’s failure to mitigate. Id. Real Asset is not binding upon us here because it applies Louisiana law, not Federal common law, but it is instructive on two points. First, the “reasonable” mitigation efforts required of the Real Asset insured included inexpensive and temporary measures like putting up a tarp, rather than expensive, permanent measures like re-roofing the building. Id. The district court’s finding that costly long-term solutions like bulkheading or moving the whole house were not reasonable mitigation measures is consistent with this holding. Second, the Real Asset court required the insurer to show that the insured’s failure to implement these reasonable mitigation measures caused additional damage. Id. Here, the district court found that Omaha had not shown that there was additional damage, because the reasonable mitigation measures available to the Gallups following Flood I would not have prevented the damage from Flood II. After reviewing the record and giving due weight to the district court’s evaluation of conflicting testimony regarding the efficacy of the reasonable mitigating measures available to the Gallups prior to Flood II, we find the district court did not err. We affirm the district court’s finding that the Gallups did not breach their common law duty of mitigation. 7 No. 06-31156