When a contractor breaches a construction contract, the non-breaching homeowner may be entitled to recover the costs necessary to complete the work. But a recent Iowa Court of Appeals decision illustrates an important limitation: homeowners also have a duty to take reasonable steps to mitigate, or reduce, the damages caused by the breach.
In Ursula Gardner v. Des Moines Stucco, LLC, No. 23-2088 (Iowa Ct. App. 2025), the court affirmed a district court judgment finding that a homeowner failed to reasonably mitigate her damages after a stucco contractor stopped work on her newly constructed home. Because the homeowner waited approximately sixteen months after filing suit to hire a replacement contractor, the partially completed stucco deteriorated. The replacement contractor was then required to apply two additional coats rather than the single finish coat contemplated by the original contract.
The result was a substantial reduction in the homeowner’s damages award.
The Contract Dispute
Gardner hired Des Moines Stucco, LLC, to install a stucco-like exterior on her newly built home. The project called for two coats, with the contractor having completed the initial base coat before the relationship between the parties broke down.
Before returning to apply the final coat, Des Moines Stucco emailed Gardner requesting 90% of the remaining final payment before it would resume work. Gardner rejected that proposed modification to the contract.
The contractor then presented Gardner with two choices: accept its proposed modification or end the parties’ relationship. Gardner responded that the contractor might be in breach of contract and warned that, if the company refused to complete the work, she would incur “an additional expense” to hire another contractor.
The parties remained at an impasse. On July 9, 2019, Gardner issued an ultimatum stating that if the crew did not return by July 24 to begin completing the project, she would file a district court action seeking the amount she had already paid, along with other fees. She also expressed concern that another contractor would not warrant Des Moines Stucco’s work.
The contractor did not return.
The Delay Became Expensive
Although Gardner knew the original contractor was not returning to complete the project, she did not hire a replacement contractor immediately. She ultimately waited approximately sixteen months after filing suit before hiring another contractor.
That delay mattered.
By the time the replacement contractor began work, the original base coat had been exposed to the elements through two winters. The new contractor determined that the condition of the base coat required two additional coats rather than merely the final coat contemplated by the original agreement.
Gardner ultimately paid the replacement contractor $52,400 to complete the exterior—substantially more than the $21,594.67 final payment she would have owed Des Moines Stucco had it completed the original contract.
Gardner sought $50,060.13 in damages. Following a bench trial, however, the district court awarded her only $18,861.33.
The court agreed that Des Moines Stucco had breached the contract, but it disagreed with Gardner’s calculation of her damages.
The Duty to Mitigate
The district court found that Gardner failed to mitigate her damages by unreasonably delaying the hiring of another contractor.
The evidence showed that the replacement contractor had to apply two coats because of the condition of the existing base coat. The district court attributed that deterioration, at least in part, to the fact that the work remained exposed through the cold-weather seasons of 2019 and 2020.
The court concluded that Gardner knew Des Moines Stucco was not returning to finish the project. Nevertheless, she waited to obtain a replacement contractor. The court characterized that delay as unreasonable and found that it “undeniably made the project more expensive to complete.”
Based on the evidence, the court determined that Gardner could have reduced the cost of the replacement work by approximately half if she had acted sooner. It therefore reduced the replacement contractor’s $52,400 charge to $26,200 when calculating the damages attributable to the breach.
Evidence About the Deteriorated Base Coat
The evidence presented at trial was particularly important to the mitigation issue.
Gardner’s own contractor testified that an additional coat was necessary because the existing base coat was not thick enough and the mesh was showing through. Gardner relied on that testimony on appeal, arguing that it demonstrated that the need for the additional coat resulted from an inadequate original base coat rather than from her delay.
But the replacement contractor did not testify that exposure to the elements could not have contributed to the condition of the base coat.
Des Moines Stucco’s operations manager also testified. Based on his decades of experience, he opined that an additional coat would not have been necessary if the final coat had been applied within approximately five months after the company stopped work—before the first winter.
The district court found the operations manager’s testimony credible.
That credibility determination became significant on appeal because the district court, as the trier of fact, was responsible for determining which evidence deserved belief. The appellate court declined to second-guess that determination where substantial evidence supported it.
The Homeowner’s Argument on Appeal
Gardner argued that her conduct was reasonable because she was attempting to resolve the dispute with Des Moines Stucco and ultimately sought to compel the contractor to return and complete the project.
She also argued that she could not find a replacement contractor sooner.
The Court of Appeals, however, concluded that the record supported the district court’s contrary finding.
The contractor presented evidence that numerous other stucco contractors were available in Iowa. There were also approximately five months between the time Des Moines Stucco stopped working and the arrival of weather conditions that would have prevented the work from being completed.
Importantly, there was no evidence that Gardner made any effort during that period to locate another contractor.
There was also no evidence that the contractor Gardner eventually hired would have been unable or unwilling to complete the work during the summer or fall of 2019.
Why the Court Affirmed the Reduced Damages Award
The Iowa Court of Appeals emphasized the established rule that a person claiming breach of contract has a duty to mitigate damages. That duty requires the non-breaching party to take reasonable measures to lessen the damages resulting from the breach.
The duty is one of reasonable diligence. At the same time, the burden remains on the party asserting inadequate mitigation to plead and prove that defense.
Here, Des Moines Stucco met that burden sufficiently to support the district court’s findings.
The appellate court noted that the district court had evidence showing both that the delay contributed to the need for an additional coat and that Gardner could have hired another contractor sooner. The record also contained evidence that completing the project in the summer or fall of 2019 would have cost approximately $20,000.
Against that evidence, the district court estimated that each of the two necessary coats would account for approximately half of the $52,400 replacement cost and therefore used $26,200 in calculating damages.
The Court of Appeals found that reduction reasonable. In fact, the $26,200 figure was more than $6,000 higher than the evidence suggesting the project could have been completed for approximately $20,000 in 2019.
The court also observed that Gardner could have presented her own evidence concerning the appropriate amount of the reduction attributable to the additional coat. Instead, she primarily relied on her argument that she had reasonably mitigated her damages.
The Takeaway for Homeowners and Contractors
Gardner v. Des Moines Stucco demonstrates that establishing a contractor’s breach is only part of a homeowner’s damages claim. Even when a contractor clearly breaches a construction contract, the homeowner must take reasonable steps to minimize the resulting losses.
For homeowners, that may mean promptly seeking replacement contractors, obtaining competing estimates, documenting the condition of unfinished work, and preserving evidence concerning the cost and necessity of remedial work. Continuing to pursue the original contractor does not necessarily eliminate the separate obligation to take reasonable steps to prevent damages from increasing.
For contractors, the case illustrates the importance of developing evidence concerning mitigation. Testimony regarding the availability of replacement contractors, the timing of construction, weather-related deterioration, and the cost of completing the work promptly can be critical to limiting damages.
The case also underscores the importance of creating a factual record. The appellate court did not decide whether it would have reached the same factual conclusions in the first instance. Instead, it asked whether substantial evidence supported the district court’s findings. Because the record contained evidence supporting the finding that Gardner’s delay increased the cost of completion, she could not overcome that deferential standard of review.
Conclusion
The Iowa Court of Appeals affirmed the judgment in Ursula Gardner v. Des Moines Stucco, LLC, holding that substantial evidence supported the district court’s finding that Gardner failed to mitigate her damages.
The lesson is straightforward: a homeowner who is forced to replace a contractor should act with reasonable diligence to prevent an unfinished project from becoming more expensive. A delay that allows partially completed work to deteriorate can become a significant factor in determining recoverable damages.
In Gardner’s case, the court concluded that her delay contributed to the need for an additional coat of stucco-like material and that the resulting expense could reasonably be deducted from her damages. The judgment was therefore affirmed.
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