Unpublished Disposition, 925 F.2d 1470 (9th Cir. 1991)

MEMORANDUM^* 

The United States Small Business Administration (SBA) appeals the district court's judgment that Bertram Bernard Katz took all steps reasonably available to him to mitigate damages after the SBA breached their contract. We affirm.

* In January 1980, Katz and the SBA entered into a written agreement to take a company called Helionetics out of Chapter 11 bankruptcy. At the time, Helionetics owed the SBA over $300,000 principal on a loan.

The agreement provided that if Helionetics issued public stock, the SBA would accept restricted, unregistered shares of the stock as full settlement of Helionetics' debt. Katz would provide the SBA with enough stock to equal 150% of the principal debt. Katz would be the beneficial owner of the stock and have a right of first refusal. As soon as a two-year selling restriction expired, SBA would liquidate enough of the stock to satisfy the principal debt plus interest. SBA would then return any excess stock or cash to Katz.

Helionetics issued public stock in June 1981. Pursuant to the agreement, Katz transferred sufficient shares of his Helionetics stock to the SBA in December 1981. Katz and the SBA started communicating about selling the stock in June 1983, after the two-year selling restriction had expired. Katz clarified that SBA itself would have to sell the stock and could do so through any broker. In September 1983, Katz confirmed in writing that he would not exercise his right of first refusal, and he authorized and requested SBA to sell the stock in satisfaction of Helionetics' debt.

Unbeknownst to Katz, however, SBA had placed a hold on the Helionetics stock while it tried to negotiate payment for an unrelated Helionetics debt. The hold was in effect from August 1983 to December 1983. Through his agent Judith Suelzle, Katz contacted SBA in April 1984 as to why no sale had taken place. The SBA responded that it would release its stock upon receipt of a cashier's check for Helionetics' principal debt plus interest. Again, Suelzle told the SBA that SBA had to sell the stock, and not Helionetics. Katz learned about SBA's continued failure to sell in June 1984.

SBA never did sell the stock, although the value remained high throughout 1984. The stock eventually became worth less than Helionetics' debt plus interest. In October 1985, Katz withdrew SBA's authorization to sell the stock and sued for breach of contract. The district court found that the SBA breached the contract by not selling the stock during the fourth quarter of 1983, and awarded damages to Katz "equal to the difference between the average market value of the shares during the fourth quarter of 1983 and the amount of the Confirmed Debt plus post-tender interest, together with interest thereon until the date of judgment." This came to more than $1.5 million.

SBA does not dispute that it breached its contract with Katz. However, it argues that Katz did not fulfill his duty to mitigate damages and therefore is not entitled to recovery. The SBA claims there is no evidence to support the district court's conclusion that "plaintiff took all steps reasonably available to him to mitigate his damages." Katz counters that he did mitigate, or alternatively, that the mitigation defense is unavailable to the SBA under the equal opportunity doctrine.

II

The district court had jurisdiction pursuant to 15 U.S.C. § 634(b) (1). We have jurisdiction under 28 U.S.C. § 1291.

Whether a party has acted reasonably to mitigate damages is a question of fact, and we review for clear error. E.E.O.C. v. Hacienda Hotel, 881 F.2d 1504, 1516 (9th Cir. 1989); Ortiz v. Bank of Am. Nat'l Trust and Sav. Ass'n, 824 F.2d 692, 695 (9th Cir. 1987).

III

While it is settled that an injured party can recover only such damages as he could not reasonably avoid, there is no requirement that expensive or burdensome steps, or litigation, be taken to minimize loss. See, e.g., Commodity Credit Corp. Rosenberg Bros. & Co., 243 F.2d 504, 511 (9th Cir.), cert. denied, 355 U.S. 837, 78 S. Ct. 62, 2 L. Ed. 2d 48 (1957); Davies v. Krasna, 14 Cal. 3d 502, 515 (1975). The only thing Katz did not do was hound the SBA to complete a contractual obligation. Katz did not know about the hold SBA had placed on the stock in 1983, nor did he have any reason to believe that the SBA was not intending to perform the sale. The district court's findings were not clearly erroneous. In view of this disposition it is unnecessary to reach Katz's alternative argument, that SBA could have avoided damages just as easily as he, thereby relieving him of his duty to mitigate.

AFFIRMED.