Opinion ID: 2310639
Heading Depth: 1
Heading Rank: 3

Heading: Mitigation of Damages and Diminution of Value of Stock

Text: The first issue raised by the plaintiffs concerns the question of mitigation of damages. The plaintiffs advanced the argument that the trial justice erred when she reduced the compensatory damages in this case from $151,380 to $67,936 on the ground that plaintiffs, by continuing a price markup of only 30 percent failed to mitigate damages rather than reinstating the original 35 percent, after the court had temporarily enjoined defendants from competing with them. Additionally, plaintiffs argued that the burden of proof was on the defendants, not plaintiffs, to show that R & L's customers would have remained loyal to R & L regardless of a price increase to 35 percent over cost. The affirmative defense of mitigation of damages is often referred to as the doctrine of avoidable consequences. Tomaino v. Concord Oil of Newport, Inc., 709 A.2d 1016, 1026 (R.I. 1998). The law in Rhode Island is well settled that a party claiming injury has a duty to exercise reasonable diligence and ordinary care in attempting to minimize its damages. Id. (citing Bibby's Refrigeration, Heating & Air Conditioning, Inc. v. Salisbury, 603 A.2d 726, 729 (R.I.1992)). The law requires reasonable efforts and ordinary care under the circumstances, not Herculean exertion. Tomaino, 709 A.2d at 1026. When mitigation of damages is at issue the defendant has the burden of proving by affirmative evidence, that the plaintiff failed to adequately mitigate his or her damages. Bibby's Refrigeration, 603 A.2d at 729 (citing Norm Co. v. Cumberland Coal Co., 53 R.I. 228, 229, 165 A. 592, 593 (1933)). Upon a careful review of the record, it is clear that plaintiffs did in fact mitigate their damages. Under the circumstances in this case, in an act of self preservation, plaintiffs mitigated their damages by reducing the markup in the first instance rather than increasing it. The testimony established that if R & L had in fact raised the markup to between 35 and 40 percent, it faced the very real risk of losing its customers to other competitors. In formulating her decision, the trial justice overlooked this materialevidence. She reasoned that once the temporary restraining order was in effect, plaintiffs had a duty to raise the markup an additional six to eight percent to mitigate any additional damages plaintiffs may have suffered. However, the defendants introduced no evidence that tended to show that R & L would have retained its customer base had it reinstated its original markup once the restraining order was issued. The defendants had the burden of establishing that plaintiffs' customers would not defect if the prices were raised. R & L's customers were present throughout the trial and were never asked whether they would have remained loyal customers to R & L in the face of a price increase or whether they would have engaged another supplier. Thus, we conclude that the trial justice erred in reducing the damages available to plaintiffs based on plaintiffs failure to mitigate damages. We are not willing, however, to hold that there is no duty to mitigate damages in an intentional tort situation; however, the extent of the mitigation should include an evaluation of the nature of the harm suffered by the plaintiffs. Accordingly, we reverse that portion of the trial justice's decision awarding compensatory damages in the amount of $67,936 and reinstate the original amount of $151,380, found by the trial justice to represent the actual amount of R & L's losses as the result of defendants' misconduct. In light of our decision rejecting the defense of mitigation of damages, we also must address the denial of damages for the diminution in value of R & L stock. The trial justice found that the figures used to determine the value of the stock were seriously flawed because they [did] not account for the plaintiff's own failure to mitigate and went on to deny damages based on the fact that plaintiffs failed to establish the loss in value to the stock with any reasonable degree of certainty. Because we have determined that plaintiffs did mitigate their damages, we reverse the decision with respect to the diminution in the value of stock and remand this issue to the Superior Court for an accurate calculation of the actual diminution in the value of plaintiffs' stock.