Where a homeowner hired a contractor to install a stucco-like exterior to her newly built home, the contractor stopped work after completing only the first of two coats of stucco and the owner hired a new contractor 18 months later to complete the job. The delay caused the first coat to deteriorate and required the new contractor to do two more coats rather than just one. In calculating the damages the court found that Gardner could have reduced her expenses with the new contractor by half ifshe had mitigated. The decision was affirmed on appeal because substantial evidence supported the finding that the Owner failed to mitigate her damages. Ursula Gardner v. Des Moines Stucco, LLC, No. 23-2088, Iowa Court of Appeals (2025).
The relationship between the homeowner and contractor broke down before the installation of the final coat. The contractor emailed the homeowner requesting 90% of the final payment before it would return to install the final coat to complete the project. The homeowner rejected the proposed modification of the contract. The contractor then gave the homeowner two options: modify the contract as it had proposed or end the relationship. The Owner responded by suggesting the contractormay be in breach of their contract and highlighting that if it refused to complete the work she would have “an additional expense to bring[ ] in another contractor.”
With the impasse still unresolved on July 9, 2019, Gardner issued an ultimatum that “if the crew does not return by July 24th to begin completing the project, a district court case will be filed for the amount already received plus any other fees as no company is going to warrant Des Moines Stucco’s work.” After filing suit, the owner waited for sixteen months before finally hiring a new contractor to complete the installation of the stucco-like exterior. Because of the condition of the already-applied base coat, the new contractor had to apply two more coats rather than just the one finish coat intended under the original contract between Des Moines Stucco and Gardner. Gardner thus paid the new contractor $52,400—significantlymore than the final payment of $21,594.67 she would have paid under the original contract. This new contractor completed the installation two years after the original contractor left it unfinished.
After a bench trial, the district court found the contractor breached its contract with the homeowner and entered judgment in her favor on her breach of contract claim. But the court awarded the homeowner only $18,861.33 of the $50,060.13 in damages that she requested. The court disagreed with two aspects of her request.
First, the court found that the homeowner failed to mitigate her damages by unreasonably delaying in hiring a newcontractor to complete the project. The court found that her new contractor “had to put two coats on instead of just thefinal coat” because “the cold weather over the winter of 2019 and then the winter of 2020 ruined the work that the contractor had already done.” And it reasoned that she knew the contractor was not coming back to finish the project andher “decision to wait [so] long was not reasonable and undeniably made the project more expensive to complete.” The court found the homeowner could have reduced her expenses with the new contractor by half—from $52,400 to $26,200—if she had mitigated. And it calculated her damage award using that lower number.
In affirming the trail court’s decision, the appellate court explained: “A person asserting breach of contract has a duty to mitigate the damages.” …. This means that the non-breaching party must take reasonable measures to lessen the damages caused by the other party’s breach. And “[t]his duty is one of reasonable diligence.” … Yet the breaching party who asserts “inadequate mitigation” has “the burden of pleading and proving” this defense.”
Testimony was presented at trial by both the original contractor and the new contractor. The new contractor— the homeowner’s own witness—testified that he had to apply any extra coat because of the condition of the base coat, which “was not thick enough” and “the mesh was showing through.” And the original contractor’s operations manager with decades of experience testified that in his opinion, no extra coat would have been needed if the finished coat had been applied in the five months after it stopped work on the project before the first winter.
On appeal, the homeowner focuses on the testimony of her new contractor, suggesting that it shows that the extra coat “was due to an inadequate original base coat” and highlighting that he did not testify about the weather causing deterioration. She also argued that the district court should not have credited the testimony of the contractor’s operations manager about the consequences of letting the base coat sit in the elements over two winters.
But the district court found the manager’s testimony credible. And as “the trier of fact,” that court … “has the prerogative to determine which evidence is entitled to belief.” And while homeowner was right that the new contractor did not testify about possible deterioration, the court stated that neither did he opine that leaving the base coat exposed to the elements for two winters could not have caused the condition of the base coat that resulted in having to apply an extra coat.
The homeowner also argued her conduct after the contractor’s breach was reasonable because she could not find a new contractor sooner and was still seeking to force the contractor to return through her demands and eventual suit for specific performance. But the district court’s contrary finding that her delay was unreasonable is supported by substantial evidence.
The contractor presented evidence that there were many other stucco contractors around Iowa and that there were about five months between when it stopped work and the weather would get too cold for the work to be completed. There was noevidence the homeowner made any attempt to find a new contractor during this time. And there was no evidence that the contractor she eventually hired would have been unable or unwilling to do the project in the summer or fall of after the original contractor ceased work
Because the court found that the homeowner’s failure to mitigate caused her new contractor to apply two coats instead ofone, a reduction in damages to account for the cost of the extra coat was appropriate. And the court could reasonably estimate that each coat would cost about half of the total cost of two coats. What’s more, the contractor presented evidencethat the cost of completing the project—if she had done so in the summer or fall of 2019—would have been about $20,000.So, the amount the court used for an appropriate reduction—more than $6000 higher—was well within the range of evidence supported by the record. Gardner had the chance to introduce her own evidence of the appropriate reduction toattribute to the extra coat. But she did not do so—choosing instead to rest on her argument that she did reasonably mitigateher damages.
In conclusion, the appellate court found that the homeowner did not clear the high bar to show that any of the district court’s factual findings about her failure to mitigate damages and the resulting reduction in her damages award are unsupported by substantial evidence. The judgment was, therefore, affirmed.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 28, No. 6 (August 2026).
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