Iowa Court of Appeals Affirms Ruling that Homeowner Failed to Mitigate Damages in Construction Dispute

09.14.2026

In Gardner v. Des Moines Stucco, LLC, 2025 WL 2796466 (Iowa Ct. App. Oct. 1, 2025), the Iowa Court of Appeals affirmed the district court’s ruling that the homeowner “failed to mitigate her damages because she did not hire a new contractor to complete the second [stucco] coat for over eighteen months, causing the first [stucco] coat to deteriorate and requiring the new contractor to do two more [stucco] coats rather than just one,” and affirmed the district court’s award of “only $1 in nominal damages—rather than the $5000 she requested—for [the homeowner’s] loss of the warranty she was originally promised under the contract because she failed to prove the value of the warranty.”

Gardner hired “Des Moines Stucco in May 2019 to install a stucco-like exterior on her home” in Cresco, Iowa. Under the contract, “Des Moines Stucco would install a stucco-like ‘exterior insulated finish system’ that is made up of two coats: a base coat of foam and mesh and a finish coat. And Gardner would pay a total of $64,784 in three installments of $21,594.67—one payment up front for materials, another after application of the base coat, and the final payment after completion of the project.” The parties’ relationship deteriorated before application of the final stucco coat. In late June 2019, Des Moines Stucco “gave Gardner two options: modify the contract as it had proposed or end the relationship. Gardner responded by suggesting Des Moines Stucco may 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.’” 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 warranty Des Moines Stucco's work.’” Des Moines Stucco refused to return.

Gardner filed a lawsuit against Des Moines Stucco in November 2019 for “(1) specific performance; (2) breach of contract; (3) breach of implied warranty of fitness for particular purpose; (4) breach of implied warranty of merchantability; and (5) breach of duty of good faith and fair dealing.” However, Gardner did not hire “a new contractor to complete the installation of the stucco-like exterior” until March 2021, over sixteen months after filing the lawsuit, and about nineteen months after her July 24, 2019, final deadline to Des Moines Stucco to return and complete the project. “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—significantly more than the final payment of $21,594.67 she would have paid under the original contract. The new contractor completed the installation in June 2021—two years after Des Moines Stucco left it unfinished.”

After a one-day bench trial, “the district court found that Des Moines Stucco breached its contract with Gardner and entered judgment in her favor on her breach of contract claim. But the court awarded Gardner only $18,861.33 of the $50,060.13 in damages that she requested.” The court “found that Gardner failed to mitigate her damages by unreasonably delaying in hiring a new contractor to complete the project. The court found that her new contractor ‘had to put two coats on instead of just the final coat’ because ‘the cold weather over the winter of 2019 and then the winter of 2020 ruined the work that Des Moines Stucco had already done.’ And it reasoned that she ‘knew after July 24, 2019 that Des Moines Stucco was not coming back to finish the project’ and her ‘decision to wait that long was not reasonable and undeniably made the project more expensive to complete.’ So the court found that Gardner 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.” The court also “found that Gardner failed to prove that she lost $5000 from not receiving the workmanship and materials warranties from Des Moines Stucco that she was entitled to under the contract. The court noted that she failed to introduce any expert actuarial evidence or any other ‘credible basis to support her claim.’ And so, it reasoned that ‘[t]he warranties promised to Gardner are surely worth something, but with nothing in the record to determine how much that is, Gardner is only entitled to nominal damages of $1.’” Gardner appealed.

The Iowa Court of Appeals agreed with the district court’s conclusion that Gardner failed to mitigate her damages. It rejected Gardner’s argument that “her conduct after Des Moines Stucco's breach was reasonable because she could not find a new contractor sooner and was still seeking to force Des Moines Stucco to return through her demands and eventual suit for specific performance” because “Des Moines Stucco 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 is no evidence Gardner made any attempt to find a new contractor during this time. While Gardner testified that she talked to two contractors sometime before hiring her new contractor in March 2021, the record does not show when she started those attempts. The record also shows that Gardner was able to hire a contractor despite any concerns about finishing another contractor's work. And there is no evidence that the contractor she eventually hired would have been unable or unwilling to do the project in the summer or fall of 2019 or why Gardner did not contact that contractor sooner.”

The Court of Appeals also rejected Gardner’s contention that “it was reasonable for her delay seeking out a new contractor because she sought specific performance” because “Gardner has cited no authority from Iowa or any jurisdiction holding that a claim for specific performance could satisfy the duty to mitigate. But even assuming that it could, the record shows that by June 28, 2019, the parties had made their intentions clear to each other. Des Moines Stucco told Gardner it would end their relationship unless she agreed to new payment terms. And she told Des Moines Stucco she was not open to renegotiating. Any possible reasonable doubt was removed by July 24—the deadline given by Gardner for Des Moines Stucco to return to work in her threat to sue. Her July ultimatum also shows that she was already thinking about the need to hire someone else, threatening that in her suit, she would seek ‘the amount already received plus any other fees as no company is going to warranty Des Moines Stucco's work.’ Yet Gardner did not file suit until four months later—at the close of the temperature window when the project could still be completed before exposure to winter. Such a delay is not an exercise of reasonable diligence under these circumstances.”

As to the amount of damages for lack of warranty, the Court of Appeals also agreed with the district court. The Court explained, “When asked by her own counsel at trial how she arrived at the $5000 value for her loss of the warranties, Gardner responded, ‘I guess just because right now I don't have a warranty on the house.’ She gave no other basis for valuing her loss at that amount nor any reason to believe that she has expertise at establishing the value of the warranties. Gardner asked no other witness about the value of the lost warranties. And she presented no expert testimony about its value.” The Court noted that proof of damages does not require the amount to be proven “with great particularity or exactness,” but instead only “proof of a reasonable basis from which the amount of damages can be inferred or approximated.” But it concluded that “Gardner did not prove any basis for computing her claimed value,” and that “she had to present something more than rank speculation. And after scouring the record, like the district court, we see no reasonable basis on which to base a damages amount.”

The main lesson from this case is that a party damaged by a breach of contract cannot sit idle and thereby increase her damages that could have been prevented with reasonable mitigation efforts. It should be noted that there is no discussion in this case that Gardner did not have the financial means to hire another contractor to mitigate her damages. Proof of financial inability to mitigate damages could be a relevant factor in assessing whether a damaged party unreasonably failed to mitigate her damages. The other lesson from this case is that a party can recover damages for the loss of a warranty, but she must present some evidence from which a judge or jury can approximate the amount of damages for such a loss.