Opinion ID: 567908
Heading Depth: 2
Heading Rank: 1

Heading: The Doctrine of Avoidable Consequences and Pennzoil's Responsibility to Mitigate its Damages

Text: 39 In its cross appeal Pennzoil argues at some length that the district court committed legal error when it reduced Pennzoil's recoverable damages--from just over $1.1 million to $150,000--on the basis of Pennzoil's failure to mitigate its damages. Pennzoil argues that the district court's reliance on the doctrine of avoidable consequences was misplaced, as that doctrine is not compatible with, and has not survived the adoption of, the general rule of comparative fault employed in maritime cases. Pennzoil's argument, while facially plausible, ultimately has no force. 40 The leading statement of the doctrine of avoidable consequences in this Circuit comes--not surprisingly--from an opinion by former Chief Judge Brown. In Southport Transit Co. v. Avondale Marine Ways, Inc., 234 F.2d 947 (5th Cir.1956), Judge Brown explained that under the doctrine of avoidable consequences, 41 a plaintiff, with an otherwise valid right of action, is denied recovery for so much of the losses as are shown to have resulted from failure on his part to use reasonable efforts to avoid or prevent them. 42 Id. at 952. Judge Brown went on to explain that the doctrine of avoidable consequences is really a rule of damages, and that as such it stands wholly apart from the rules that determine who is at fault for the initial injury. That is, unlike contributory negligence, which occurs before any wrongdoing, 43 [t]he doctrine of avoidable consequences comes into play at a later stage. Where the defendant has already committed an actionable wrong, whether tort or breach of contract, then this doctrine limits the plaintiff's recovery by disallowing only those items of damage which could reasonably have been averted.... [T]he doctrine of avoidable consequences is not considered a defense at all, but merely a rule of damages by which certain particular items of loss may be excluded from consideration. 44 Id. (emphasis added). 45 Pennzoil contends, however, that the doctrine of avoidable consequences is incompatible with a scheme of comparative liability, and therefore was vitiated by the Supreme Court's decision in 1975 that liability in maritime causes of action is to be apportioned on the basis of comparative fault. United States v. Reliable Transfer Co., 421 U.S. 397, 95 S.Ct. 1708, 44 L.Ed.2d 251 (1975). Pennzoil is able to point to some confusion in the cases in support of its argument that the doctrines of comparative fault and avoidable consequences cannot co-exist. Properly understood, however, the two doctrines are not at all inconsistent, as Judge Rubin carefully explained: 46 Courts have often referred to a so-called duty to mitigate damage, but there is no such duty, for there is no correlative right upon its violation. There is instead a method of apportioning damages between the parties where the injured party has, subsequent to infliction of the harm, failed to exercise that degree of care society demands of the reasonable person. 47 The consequences of such post-injury negligence--as distinguished from negligence contributing to the harm and acting as a bar to recovery--is to deny to the negligent victim damages for so much of the losses as are shown to have resulted from failure on his part to use reasonable efforts to avoid or prevent them. Southport Transit Co. v. Avondale Marine Ways, 234 F.2d at 952. 48 Tennessee Valley Sand & Gravel Co. v. M/V DELTA, 598 F.2d 930, 932-33 (5th Cir.1979) (emphasis added) (citations omitted). Thus, the two doctrines serve different functions and may peacefully co-exist: when determining who shall be liable for what in the wake of some loss, the court employs the rule of avoidable consequences to determine what damages are recoverable, and looks to the comparative fault scheme of Reliable Transfer to determine the portion of the recoverable damages each party must pay. 49 The district court properly applied both of these doctrines to the facts before it. The district court determined that United Gas and Offshore Express were equally responsible for the initial injury and held them both 50% liable, as required by the doctrine of comparative fault. The district court also applied the doctrine of avoidable consequences, finding that Pennzoil's post-injury conduct was unreasonable and that it caused a loss that could have been averted. The district court quite properly refused to allow Pennzoil to recover for that portion of its loss.