Appeal from the Marion Superior Court, No. 49D04-0605-PL-19166. The Honorable Cynthia J. Ayers, Judge. On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-1204-PL-340.
ATTORNEY FOR APPELLANT: Gary M. Selig, Indianapolis, Indiana.
ATTORNEYS FOR APPELLEES: J. David Hollingsworth, Brent R. Borg, Steven M. Lutz, Fishers, Indiana.
Rush, Justice. Dickson, C.J., and David and Massa, JJ., concur. Rucker, J., concurs in result.
This is the second appeal in protracted litigation over the breach of a real-estate sales contract. The first appeal established that Buyers breached the contract when they unreasonably demanded that Seller fix a minor electrical problem as a condition of purchase. In this second appeal, we granted transfer to consider whether the trial court acted within its discretion in calculating Seller's damages. Both parties appealed the trial court's findings regarding Seller's efforts to mitigate her damages. Seller argues that her efforts were reasonable and justify a full award. Buyers argue Seller failed to mitigate her damages in two ways: 1) by failing to respond to their demand for electrical repairs and thus preserve the contract, and 2) by failing to accept a substitute offer to purchase the property after the agreement fell through. The trial court disagreed with Buyers' first argument but agreed with the second, and reduced Seller's damages accordingly. We hold the trial court was within its discretion to reach this conclusion, and therefore affirm the award of damages and attorney fees.
Facts and Procedural History
On February 4, 2006, Defendants Michael and Noel Heymann agreed to buy a condominium from Plaintiff Gayle Fischer for $315,000. Both parties signed a purchase agreement (" Agreement" ), and the Heymanns paid $5,000 in earnest money. The Agreement authorized the Heymanns to terminate if Fischer refused to fix any " major defect" discovered upon inspection, but did not permit them to terminate if Fischer refused to perform " routine maintenance" or make " minor repair[s]." On February 10, 2006, the Heymanns demanded Fischer fix an electrical problem after an inspection report revealed electricity was not flowing to three power outlets. The Heymanns thought this was a " major defect" under the Agreement and conditioned their purchase on Fischer's timely response. Fischer failed to timely respond to their demand--even though she eventually fixed the problem for $117 on February 20--and the Heymanns tendered a mutual release. Fischer refused to sign the release and later sued for specific performance, or damages in the alternative, on May 9, 2006--two days before the original date of closing.
The trial court rejected Fischer's claim after the initial bench trial on the merits. The court found the Heymanns reasonably believed the electrical problem was severe, which justified their termination of the Agreement. But a divided panel of the Court of Appeals disagreed. The panel held that the Heymanns' demand itself breached the Agreement because the demand stemmed from an objectively unreasonable belief that the electrical problem was a " major defect." Fischer v. Heymann, 943 N.E.2d 896, 902-03 (Ind.Ct.App. 2011), trans. denied (" Fischer I" ). The Court of Appeals thus reversed and remanded for the trial court to determine damages. Id. at 903.
On remand, Fischer sought $306,616.73 in total damages, attorney fees, and court costs. Broken down, her damages request accounted for (1) the difference between the Heymanns' purchase price of $315,000 and the 2011 sale price of $180,000; (2)
$12,333.89 in closing costs; (3) $139,075.54 for the cost of maintaining the condo from 2006, when the Heymann deal fell through, until 2011 when she sold the property; (4) $11,222.50 in attorney fees; and (5) $8,984.80 in court costs. As the litigation continued on Fischer's second appeal, she argued those fees and costs have increased to $12,268.24 and $9,834.80, respectively.
The trial court entered its findings and conclusions after hearing extensive testimony. It concluded Fischer failed to mitigate her damages because she could have accepted an offer to sell the condo in 2007 for $240,000, instead of waiting to sell it in 2011 for only $180,000. Had she sold in 2007, she could have avoided all carrying costs and maintenance expenses she incurred between 2007 and 2011. As a result, the trial court concluded she was only entitled to $93,972.18--the difference between the original $315,000 selling price and the $240,000 ...