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Keywords

contractlawsuitbreach of contractdamagesappealtrialwill

contractbreach of contractdamagesappealtrialsustained

Related Cases

Fair v. Red Lion Inn, 943 P.2d 431, 12 IER Cases 1761, 21 Colorado Journal 922

Facts

Patricia Fair was employed by Red Lion Inn and signed an employment agreement stating her employment was at will. After a non-work-related injury, she was granted a medical leave of absence. Upon her return, she was offered reinstatement but did not accept it due to concerns about retaliation, her physical condition, and the meaning of 'appropriate benefits.' Red Lion terminated her employment, leading to Fair's lawsuit claiming breach of contract.

On April 14, 1990, Fair was injured in a non-work related traffic accident. As a result of injuries from the accident, Fair applied for and was granted a medical leave. … In early July 1990, however, Fair learned that her employment with Red Lion had been terminated.

Issue

Whether Fair's refusal to accept Red Lion's unconditional offer of reinstatement constituted a failure to mitigate damages.

whether as a matter of law, the refusal of an employee to accept her former employer's unconditional offer of reinstatement, after a breach of contract by the employer, constitutes a failure to mitigate damages on the part of the employee.

Rule

A discharged employee has a duty to mitigate damages by accepting an unconditional offer of reinstatement in the absence of special circumstances, and failure to do so results in the loss of any claim to damages based on back pay from the date of the reinstatement offer.

an injured party claiming breach of contract 'has the duty to take such steps as are reasonable under the circumstances in order to mitigate or minimize the damages sustained.'

Analysis

The court analyzed Fair's reasons for rejecting the reinstatement offer and found them insufficient to constitute special circumstances. Fair's concerns about retaliation and her physical condition were not supported by evidence, and she failed to communicate her concerns to Red Lion. The court concluded that her rejection of the offer was unreasonable and thus constituted a failure to mitigate damages.

the reasons offered by Fair do not, as a matter of law, constitute 'special circumstances' evincing a reasonable basis for rejecting Red Lion's offer of reinstatement.

Conclusion

The court affirmed the Court of Appeals' decision, reversing the damages award and remanding for a new trial on damages only, as Fair's reasons for rejecting the reinstatement offer did not justify her failure to mitigate.

we agree with the court of appeals' conclusion that there was not sufficient evidence on the issue of the reasonableness of Fair's rejection of Red Lion's Reinstatement Offer and that the trial court erred in refusing to limit the damages award.

Who won?

Red Lion Inn prevailed because the court found that Fair failed to mitigate her damages by not accepting the unconditional offer of reinstatement.

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