Opinion ID: 1425637
Heading Depth: 4
Heading Rank: 2

Heading: Availability of other reasonable alternative methods of mitigation

Text: A failure to mitigate, however, does not preclude wholesale recovery. Rather, in such a case, the defendant is merely entitled to offset his damages payment by the amount he can prove could have been avoided through plaintiff's reasonable efforts. E.g., Koppers, 98 F.3d at 1448; State Pub. Sch. Bldg. Auth. v. W.M. Anderson Co., 49 Pa.Cmwlth. 420, 410 A.2d 1329, 1331 (1980). The reasonableness determination must be judged in the light of one viewing the situation at the time the problem was presented. Kellett Aircraft, 186 F.2d at 198. Here, ReliaStar offered three alternative mitigation strategies through the testimony of its expert witness, Dr. Vincent Warther. The first strategy proposed maintaining the Pruskys' portfolio exactly as it existed on November 5, 2003, the date ReliaStar breached the contracts by revoking their electronic trading privileges. Over the breach period, this hypothetical allocation would have outperformed Plaintiffs' desired trades by over $1.3 million. The second proposal was more complex. Analyzing the desired trades, Dr. Warther determined that the Pruskys, on average and on an aggregate basis, had 44% of their money in money market over the three-year breach period. As such, he proposed a fixed distribution of 44% in money market, and 56% in mutual funds. The 56% would have duplicated the Pruskys' mutual fund portfolio as it existed on the date of the breach. This strategy would have yielded $264,000 more than did the desired trades. The third proposal replicated a buy-and-hold allocation based on Plaintiffs' requested trades. In this scenario, Dr. Warther gathered all of the Pruskys' desired trades for the same three years following the breach and held the funds in which the [Pruskys] invested in the same proportions and during the same time periods as the Pruskys' desired trades. [12] Prusky II, 474 F.Supp.2d at 711. This last proposal produced $148,000 less than Plaintiffs' desired trades would have, but outperformed the pure money market allocation by $912,000. The District Court rejected the first strategy, reasoning that basing a long-term hold position on allocations Plaintiffs just happened to have held on a particular day was arbitrary at best. Id. Insofar as the second strategy was also partly premised on holding the portfolio fixed based on the Pruskys' particular allocations on the date of the breach, the Court found it to be similarly unreasonable. We cannot say that these conclusions were clearly erroneous; it is certainly plausible that a reasonable investor in the Pruskys' position would not have considered such a random portfolio allocation to be a sound long-term investment strategy. However, the District Court concluded the third proposed strategy represent[ed] a reasonable mitigation strategy that was readily available to the Pruskys. Id. at 711-12. To the extent that this method was derived through an after-the-fact tabulation of the desired trades during the breach period, we recognize that it may seem somewhat counterintuitive to expect the Pruskys to be able to carry out this precise asset allocation without assuming some prescience on their part. Nevertheless, where, as here, the lost performance implicates foregone investment opportunities, and where mitigation efforts could have consisted of any of countless permutations of investments held for varying durations, we think that any legitimate attempt to demonstrate a mitigation offset will invariably entail some degree of ex-post reasoning. As such, insofar as this strategy attempted to mimic the risk profile underlying the desired allocations, made buy-and-hold investments in the same funds the Pruskys would have bought absent the breach, and was active in its management of the portfolio, we are satisfied there was no clear error in the District Court's conclusion that the strategy was one that was both reasonable and readily available to the Pruskys. Finally, we wish to conclude with the observation that for purposes of clear error review, it is irrelevant that we may not view this strategy to be the most reasonable or the most persuasive one, or even if we feel that we would have made entirely different findings on the mitigation question had we been sitting as the original triers of fact. Here, we must uphold the trial court's findings on the availability of alternative mitigation strategies, and on the amount of the mitigation offset, simply because they are not, in light of the whole record, implausible. Therefore, we will affirm the judgment for the Pruskys in the amount of $107,293.28.