Opinion ID: 1366771
Heading Depth: 1
Heading Rank: 4

Heading: The Hannemans' Damages

Text: Under the peculiar facts of this case, where Swenson purported to sell land which she mistakenly thought she owned, the district court correctly determined that the measure of the Hannemans' damages would be the amount of their out-of-pocket loss. However, damages are awarded to make the aggrieved party whole, and the district court's award, although pursuant to the correct standard, did not adequately reflect the out-of-pocket loss sustained by the Hannemans. See Hornwood v. Smith's Food King No. 1, 107 Nev. 80, 84, 807 P.2d 208, 211 (1991). Out-of-pocket damages are measured by the difference between the amount paid by the aggrieved party and the actual value of that which was received. Randono v. Turk, 86 Nev. 123, 130, 466 P.2d 218, 223 (1970). The Hannemans were dispossessed of property concerning which they had expended approximately $53,000.00. [4] Nevertheless, the district court limited the Hannemans' damages to $7,500.00 based upon findings that the Hannemans had failed to mitigate their damages when they abandoned the property, and that the monthly mortgage payments were completely offset by the reasonable rental value they received in occupying the property. As a general rule, a party cannot recover damages for losses that a reasonable effort could have avoided. Conner v. Southern Nevada Paving, 103 Nev. 353, 355, 741 P.2d 800, 801 (1987). Our review of the record compels us to conclude that the district court clearly erred in finding that the Hannemans did not make a reasonable effort to mitigate their losses. The Hannemans removed virtually every item of value they had placed on the property that was reasonably removable, and deducted the value thereof from their damages. As a result, the damages were mitigated by approximately $8,000.00. Given the circumstances of this case, the Hannemans could have done little else by way of mitigation. Moreover, the district court's reliance upon Mr. Kjell's testimony was misplaced. The cost of restoring the house after the removal of items by the Hannemans represented an irrelevant consideration by Swenson since she had no ownership interest in the house from which the salvaged items had been taken. Hanneman's mitigative actions were beneficial to Swenson, and thus could not serve to further reduce Swenson's liability to the Hannemans. Ordinarily, a fair rental value of the property would be a proper offset against payments ineffectually applied to the purchase price of the property during its occupancy by the putative purchaser. In this instance, however, we have determined that such an offset is unwarranted. The Hannemans agreed to purchase property that included a house that was uninhabitable. They lived and worked on the property under conditions that were substantially less than desirable. The Hannemans not only made the road to the property usable, they worked in excess of 2,000 hours in an effort to restore the premises to a habitable condition. Although we have concluded that the Hannemans must receive as damages, an award for the time and materials expended on the property, they will not be compensated for the period of time they had to endure living conditions that would not have induced them onto the property as renters. As buyers, they executed and made payments under a promissory note that was to result in their eventual ownership of 5.88 acres. The Hannemans relied upon their contract with Swenson and invested approximately $53,000.00 into what they thought would be their permanent home. There is no evidence in the record that would support the proposition that the Hannemans, as temporary renters, would have invested the same amount of time and money in the delapidated and uninhabitable house at issue. Swenson's breach of the contract to convey 5.88 acres deprived the Hannemans of the opportunity to purchase and make habitable a home in which they could build an equity and enjoy the pride of ownership. Thus, we conclude that the district court clearly erred when it calculated the amount of the Hannemans' out-of-pocket damages. Hermann Trust v. Varco-Pruden Buildings, 106 Nev. 564, 566, 796 P.2d 590, 591-92 (1990). The Hannemans are entitled to the total amount of their investment, less the amount of their mitigation, together with interest from July 22, 1976. Therefore, we affirm Swenson's liability to the Hannemans, but direct the district court, upon remand, to recalculate the actual out-of-pocket damages suffered by the Hannemans. The amount of Swenson's $7,500.00 judgment against Downer must also be increased accordingly.