Duty to mitigate damages in fire and burglar alarm defense case May 15, 2026

KEN KIRSCHENBAUM, ESQ
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Duty to mitigate damages in fire and burglar alarm defense case
May  15, 2026
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Duty to mitigate damages in fire and burglar alarm defense case
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    There is a duty that injured parties have to try and contain damages, not allow them to get worse.  A party causing damage is not liable for damages that could have reasonably been contained.  However, in a lawsuit the defendant has the burden to raise the issue of mitigation of damages and prove the plaintiff's failure to contain the damages.
    Home owners in Jackson, Wyoming had home owners insurance covering loss by fire and other casualty.  While on vacation the house burned down.  The homeowner carrier paid at least $2.5 million and, exercising its subrogation rights, sued a company providing natural gas to the residence claiming that the gas distribution system in the house was defective allowing gas to leak into the house and explode.  
    The gas company, defendant, claimed the insurance company plaintiff failed to mitigate its damages because, at time of binding the insurance and prior to the fire loss, the carrier had an inspection of the house.  The inspector found and recommended, among other things:  
    "It was noted that the insured is not currently fully protected by a central station alarm system. For the protection of the home, it is recommended that a full central station alarm system be installed. The burglar alarm should include at a minimum, contacts on all exterior doors and interior motion detectors in the main hallways on each level.
    The fire alarm should include smoke detectors covering all living areas. There are no heat sensing devices located in the areas that contain heat sources including the mechanical room, garage and kitchen area. This is a high value residence and the responding fire department would need immediate notification to effectively deal with an emergency at this home. It is recommended that the current alarm system be upgraded to include heat detectors in the above mentioned areas. This would greatly increase the effectiveness of the current alarm system."
    The carrier never provided this inspection report to the home owners and never insisted or even recommended the suggestions regarding the fire and burglar alarm.  The gas company defendant contended that this constituted a failure to mitigate its damages and raised the issue as an affirmative defense in its Answer to the Complaint.  The Plaintiff carrier moved for summary judgment to strike the affirmative defense.
    Defendant's position was crystalized by the Judge as:
    "Defendant should be allowed to argue that AEIC failed to mitigate the damages at the Property by failing to take any action on the information it received from the Castle [home inspection] Report. Whether, and to what extent, AEIC failed to mitigate is a question for the jury."
    The Judge however followed the law, noting:
    The “[d]octrine of ‘mitigation of damages,’ sometimes called doctrine of avoidable consequences, imposes on [an] injured party duty to exercise reasonable diligence and ordinary care in attempting to minimize his damages after injury has been inflicted ..."
    The key phrase is "after the injury has been inflicted".  Another way to put it is that the duty to mitigate damages does not arise until the loss has been incurred, not after.  The judge struck the affirmative defense so the issue of failure to mitigate based on the inspection report won't be part of the case.
    But the case is not over because the home owners decided, after the fire loss, to complete their vacation, leave the damages home exposed to the elements.  This could be viewed to constitute failure to mitigation their damages and the acts of the home owners, in this context the Subrogee, are attributed to the subrogating Subrogor, the plaintiff carrier.  
    Plaintiff in this action was represented by a well known law firm who represents carriers subrogating claims.  I've had many cases with them suing alarm companies [haven't lost any as I recall, BTW].  There is no mention of the alarm company who designed and installed the alarm system.  Wonder why or how the lawyers missed that one.
    Here's the case:
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2025 WL 4657336
Only the Westlaw citation is currently available.
United States District Court, D. Wyoming.
AMERICAN ECONOMY INSURANCE COMPANY, Plaintiff,
v.
LOWER VALLEY ENERGY, INC., a Wyoming Corporation, Defendant.
Case No. 24-CV-155-SWS
Filed 12/29/2025

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING FAILURE TO MITIGATE DAMAGES

Scott W. Skavdahl United States District Judge
*1 This matter comes before the Court on the Plaintiff's motion for partial summary judgment regarding Defendant's affirmative defense of failure to mitigate damages (ECF 39, 40).1 Defendant filed an opposition thereto (ECF 56), and Plaintiff replied (ECF 62). Having considered the parties’ submissions and arguments, reviewed the record herein, and being otherwise fully advised, the Court will grant in part and deny in part Plaintiff's motion for the reasons discussed herein.
FACTUAL BACKGROUND
The facts relevant to this motion are largely undisputed. Victor and Paula Menghetti purchased a residential property in Jackson, Wyoming, in 2006 and began residing there fulltime around 2018 or 2019. (Paula Menghetti Depo. 17:3-25.2) In January 2022, the Menghettis purchased a homeowners insurance policy from Plaintiff American Economy Insurance Company (AEIC) for their property. (ECF 51-1.) Prior to issuing the policy, Plaintiff AEIC hired a company called Castle Inspection Service to perform an inspection of the Jackson property and prepare a report of its findings. (Jacob Segalla Depo. 34:3-7, 64:8-65:213; ECF 40-8.) That home inspection report included a recommendation for upgrading the home's alarm system, which at that time included only several smoke detectors in the residence, to a centralized alarm system with heat and burglary sensors:
It was noted that the insured is not currently fully protected by a central station alarm system. For the protection of the home, it is recommended that a full central station alarm system be installed. The burglar alarm should include at a minimum, contacts on all exterior doors and interior motion detectors in the main hallways on each level.
The fire alarm should include smoke detectors covering all living areas. There are no heat sensing devices located in the areas that contain heat sources including the mechanical room, garage and kitchen area. This is a high value residence and the responding fire department would need immediate notification to effectively deal with an emergency at this home. It is recommended that the current alarm system be upgraded to include heat detectors in the above mentioned areas. This would greatly increase the effectiveness of the current alarm system.
(ECF 40-8 p. 3.) As Plaintiff AEIC had hired Castle Inspection Service, this report was provided only to Plaintiff AEIC, and Plaintiff AEIC never provided it to the Menghettis nor ever informed them of any of the recommendations in the report. (Jacob Segalla Depo. 34:15-35:1.)
The Menghettis renewed the policy in January 2023, which was valid into January 2024. (ECF 40-5.) Tragically, a fire destroyed much of the Menghettis’ property and possessions in March 2023. (Paula Menghetti Depo. 17:12-20.) The Menghettis made a claim for coverage to Plaintiff AEIC, which paid the claim following its investigation of the matter. (Amy Williams Depo. 23:10-24:144; see ECF 51-10.) The Court has seen several different amounts Plaintiff AEIC asserts it has paid out for this claim in the record, but it seems safe to say that AEIC has paid more than $2.5 million to or on behalf of the Menghettis for this claim. (See ECF 1 ¶ 18; ECF 51-8 pp. 7-8; ECF 60-11 p. 5.)
Plaintiff AEIC now brings this subrogation claim against Defendant Lower Valley Energy, Inc. (LVE). Plaintiff AEIC asserts Defendant LVE installed the natural gas distribution system for the Menghettis’ property and supplied natural gas to the property over the years. (ECF 1 ¶¶ 7-9.) Plaintiff AEIC contends Defendants LVE's system broke due to Defendant LVE's negligence, which allowed gas to leak into the Menghettis’ residence and cause the fire. (Id. ¶ 10.) Plaintiff AEIC brings this lawsuit on behalf of its insured, the Menghettis, to recover from Defendant LVE what it has paid under the Menghettis’ insurance policy.
Among its several defenses, Defendant LVE contends Plaintiff AEIC
could have taken reasonable steps to avoid damages by, at a minimum, notifying the occupants of the recommendations [in the home inspection report], or requiring installation of a centrally monitored alarm system.... If installed, a centrally monitored alarm system at the home would have detected the fire, and provided accurate information on the location of the fire. Under Wyoming law, AEIC is responsible for damages that it could have avoided with reasonable effort and without undue risk, expense, or humiliation.
(ECF 56 pp. 6-7.) In the instant motion for partial summary judgment, Plaintiff AEIC seeks a ruling that this “failure to mitigate damages” defense is not cognizable as a matter of law under the circumstances of this case.
SUMMARY JUDGMENT STANDARD OF ADJUDICATION
Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A fact is material if, under the governing law, it could have an effect on the outcome of the lawsuit. A dispute over a material fact is genuine if a rational jury could find in favor of the nonmoving party on the evidence presented.” Jones v. Norton, 809 F.3d 564, 573 (10th Cir. 2015) (internal quotation marks omitted). The Court views the record and all reasonable inferences that might be drawn from it in the light most favorable to the party opposing summary judgment. Dahl v. Charles F. Dahl, M.D., P.C. Defined Ben. Pension Trust, 744 F.3d 623, 628 (10th Cir. 2014).
DISCUSSION
Defendant LVE first argues Plaintiff AEIC has no right of subrogation to assert the negligence claim in this lawsuit. (ECF 56 pp. 2, 6.) The Court has previously considered these assertions from Defendant LVE and ruled in Plaintiff AEIC's favor. (ECF 77.) The parties are directed to that Order for further explanation. Accordingly, the Court will proceed to the primary question presented in this motion concerning the mitigation of damages.
Defendant LVE presents this issue as Plaintiff AEIC's failure to mitigate its damages, asserting,
Defendant should be allowed to argue that AEIC failed to mitigate the damages at the Property by failing to take any action on the information it received from the Castle [home inspection] Report. Whether, and to what extent, AEIC failed to mitigate is a question for the jury.
(ECF 56 p. 8.) A defendant's assertion that a plaintiff failed to mitigate their damages is an affirmative defense, Hacker Oil, Inc. v. Hacker, 540 P.3d 1187, 1190 (Wyo. 2024), and Defendant LVE here pled such affirmative defense in its answer (ECF 8 p. 5). For a defendant asserting the affirmative defense of failure to mitigate damages, it is the defendant's burden to “introduce enough evidence from which a jury could reasonably conclude that appellant failed to mitigate to enable them to arrive at a damages award.” Stocki v. Nunn, 351 P.3d 911, 929 (Wyo. 2015) (quoting McWilliams v. Wilhelm, 893 P.2d 1147, 1149 (Wyo. 1995)).
*3 The material, undisputed facts of this case cannot support allowing Defendant LVE to allege Plaintiff AEIC failed to mitigate its damages by failing to share the inspection report's recommendation to install a central alarm system with the Menghettis or by failing to require the Menghettis to install such a system. Defendant LVE is trying to fit a square peg into a round hole. “The requirement to mitigate damages begins when the injury occurs and damages are accumulating.” Crouch v. Cooper, 556 P.3d 199, 210 (Wyo. 2024) (citing Hacker Oil, 540 P.3d at 1190).
The “[d]octrine of ‘mitigation of damages,’ sometimes called doctrine of avoidable consequences, imposes on [an] injured party duty to exercise reasonable diligence and ordinary care in attempting to minimize his damages after injury has been inflicted ....”
Hacker Oil, 540 P.3d at 1189 (emphasis added) (quoting UNC Teton Expl. Drilling, Inc. v. Peyton, 774 P.2d 584, 592 (Wyo. 1989)). “The doctrine of avoidable consequences ‘applies to the time during which damages are accruing ....’ ” Id. at 1190 (quoting Reed v. Aaacon Auto Transp., Inc., 637 F.2d 1302, 1305 (10th Cir. 1981), overruled on other grounds by Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112 (10th Cir. 1989)); see Ortiz v. Cooper Tire & Rubber Co., No. CIV-13-32-D, 2015 WL 1384345, at *2 (W.D. Okla. Mar. 25, 2015) (“A duty to mitigate damages arises when a plaintiff suffers an injury as a result of the defendant's conduct. Conduct occurring before the accident is not a damages issue.”); Mitigation-of-Damages Doctrine, Black's Law Dictionary (12th ed. 2024) (“The principle inducing a plaintiff, after an injury or breach of contract, to make reasonable efforts to alleviate the effects of the injury or breach.”).
Here, Plaintiff AEIC's alleged failures occurred before any damages from the fire began to accumulate. Plaintiff AEIC (and the Menghettis) had no legal requirement5 to mitigate damages before the damages began accruing. Accordingly, to the extent Defendant LVE's affirmative defense of failure to mitigate damages is based on Plaintiff AEIC's failure to suggest or require an upgraded fire alarm system before the March 2023 fire, this defense fails as a matter of law. See Ortiz v. Cooper Tire & Rubber Co., 2015 WL 1384345, at *2 (“Accordingly, to the extent Defendant's affirmative defense of failure to mitigate damages is based on the injured persons’ failure to buckle their seatbelts before the accident, this defense fails as a matter of law.”).
Defendant LVE largely relies on the case of Moore v. Continental Ins. Co., 813 P.2d 1296 (Wyo. 1991), to frame this issue as consistent with an affirmative defense of failure to mitigate damages. Specifically, Defendant LVE relies on the Wyoming Supreme Court's statement that “damages which the plaintiff might have avoided with reasonable effort and without undue risk, expense, or humiliation are either not caused by the defendant's wrong or need not have been, and therefore, are not [to be charged] against him.” (ECF 56 p. 7 (quoting Moore, 813 P.2d at 1301).) Moore, however, is entirely consistent with the principle that damage mitigation is not required until damages exist, and it does not advance Defendant LVE's argument here. In Moore, the homeowner's insurance policy was canceled by the insurer for non-payment of premiums four months before a fire damaged the homeowner's property. 813 P.2d at 1296. “Moore claimed that Continental [the insurer] wrongfully canceled his insurance coverage and was, therefore, liable to him for fire damage to his home that occurred on May 2, 1988.” Id. Moore's lawsuit against his former insurer alleged the insurer breached the insurance policy by improperly canceling it. Id. at 1299 (“The primary claim of plaintiff is based upon a breach of contract theory.”). Accordingly, Moore's damages from the insurer's allegedly-improper policy cancelation began with the policy cancelation, because it was then that any breach occurred and it was then that Moore knew he had lost the insurance coverage to which he believed he was entitled. And it was at the time of “wrongful” cancelation that Moore's obligation to mitigate his damages arose, either by correcting the wrongful cancelation or seeking coverage elsewhere. But, as the Wyoming Supreme Court observed, Moore utterly failed to mitigate the alleged breach in the four months between policy cancelation and the fire that damaged his house.
*4 Implicit in the district court's findings was a recognition that Moore knew that his insurance had been canceled, whether that was done wrongfully or not, and that he needed to obtain insurance elsewhere. The record is abundantly clear that he accepted return of unearned premium without complaint. Four months passed during which time he neither objected, inquired or attempted to pay. A party may, in certain instances, be required to mitigate his damages, and whether an injured party has exercised reasonable diligence and care in mitigating damages is for the trier of fact to decide. Hollon v. McComb, 636 P.2d 513, 516 (Wyo.1981). And where reasonable minds could not differ with respect to efforts to mitigate, as here, summary judgment is appropriate.
This case might present a different posture if Moore had been attempting to mitigate his loss by seeking other insurance. Such was not the case, and there is no need to assign the resolution of the mitigation question to a fact finder because the record demonstrates that Moore made no effort to mitigate his damages. Although he was informed in January of 1988 that his homeowner's policy was canceled, he made no effort to either contest the cancellation of his policy or obtain other insurance. Bonnie Fulton [Moore's secretary] testified that she was informed, on behalf of her employer, that the policy was canceled, and that she simply forgot to do anything about it. The first effort Moore made to do anything did not take place until after his home had been damaged by fire.
Id. at 1300–01.
The injury at issue in Moore was the defendant-insurer's allegedly improper cancelation of insurance coverage in breach of the policy. The injury at issue in this lawsuit, in contrast, is the fire allegedly caused by Defendant LVE's negligence. The requirement to mitigate damages begins in this case with the fire. Therefore, no requirement to mitigate existed before the fire. Moore did not hold that a requirement to mitigate damages may arise before any injury has occurred.
Based on the undisputed, material facts pertaining to this issue, the Court holds that, to the extent Defendant LVE's affirmative defense of failure to mitigate damages is based on Plaintiff AEIC's failure to suggest or require an upgraded fire alarm system before the March 2023 fire, this defense fails as a matter of law and may not be asserted at trial. The Court will grant summary judgment in Plaintiff AEIC's favor to this extent.
However, to the extent Defendant LVE seeks to assert as an affirmative defense a failure by the Menghettis to mitigate their damages (and, through subrogation, those of Plaintiff AEIC in this action) that arose after the fire, the Court finds genuine disputes of material fact preclude summary judgment. Specifically, there is some evidence in the record that the Menghettis were vacationing in Mexico at the time of the fire and chose to complete their planned vacation instead of returning to Jackson early to address the matter. (Victor Menghetti Depo. 85:6-14.6) Defendant LVE asserts this exposed the Menghettis’ real and personal property to additional damage as “the home sat open and exposed to the elements.” (ECF 56 p. 5.) To be sure, Plaintiff AEIC disputes this, arguing the Menghettis’ son-in-law, who was in Jackson at the time, retrieved items from the property and assisted insurance representatives with inventory while the Menghettis were in Mexico. (ECF 62 p. 5; see Ian Smith Depo. 42:22-43:18, 55:16-57:12.7) But this dispute about post-fire conduct presents a question of fact. Accordingly, summary judgment must be denied as it relates to events occurring after the fire because Defendant LVE may be able to present sufficient evidence for post-fire mitigation of damages (or lack thereof) to be considered by the jury.
CONCLUSION AND ORDER
*5 There existed no legal requirement or obligation for Plaintiff AEIC or the Menghettis to mitigate damages before any damages from the fire, which are the damages at issue in this lawsuit, occurred. Defendant LVE will not be permitted at trial to assert any failure to mitigate damages occurring before the March 2023 fire. However, this does not preclude Defendant LVE from arguing a failure to mitigate damages based on actions after the fire (but this shall not be construed as a pretrial ruling of admissibility, either).
Finally, the Court notes it did not consider the written reports of the Defendant LVE's legal expert (ECF 40-11) in considering and ruling on this summary-judgment motion. The primary question in this motion required the Court to determine the applicable law and apply it to the largely undisputed facts presented by the parties. It would be improper for the Court to rely on expert legal testimony in conducting this analysis. See Wollan v. U.S. Dep't of Interior, Bureau of Land Mgmt., 997 F. Supp. 1397, 1403 (D. Colo. 1998) (“Where the ultimate issue is a question of law, the opinion of a legal expert, even a lawyer, interferes with the judge's role as ‘sole arbiter of the law’ and should not be allowed.”) (quoting Specht v. Jensen, 853 F.2d 805, 807 (10th Cir. 1988)).
IT IS THEREFORE ORDERED that “Plaintiff American Economy Insurance Company's Motion for Summary Judgment Regarding Defendant's Affirmative Defense of Failure to Mitigate Damages” (ECF 39) is GRANTED IN PART AND DENIED IN PART. To the extent Defendant LVE's affirmative defense of failure to mitigate damages is based on Plaintiff AEIC's failure to suggest or require the Menghettis install an upgraded fire alarm system, or other recommendations set forth in the Castle Report, prior to the March 2023 fire, this defense fails as a matter of law, and partial summary judgment is granted in Plaintiff AEIC's favor accordingly. However, Plaintiff AEIC's request for partial summary judgment is denied as it relates to Defendant LVE's affirmative defense of failure to mitigate damages for events occurring after the March 2023 fire.
ORDERED: December 29, 2025.
All Citations
Slip Copy, 2025 WL 4657336
Footnotes
1 Plaintiff's motion for partial summary judgment regarding volunteer payments (ECF 48) and Defendant's motion for summary judgment (ECF 50) will be addressed together via separate order.
2 ECF 40-2; ECF 49-1; ECF 60-1.
3 ECF 40-7; ECF 51-7; ECF 60-8.
4 ECF 49-6; ECF 51-6; ECF 60-7.
5 The Wyoming Supreme Court explained in Hacker Oil that it is a misnomer to call it a “duty” to mitigate damages because “[t]here is no right of action given against the person who violates the ‘duty.’ ” 540 P.3d at 1189-90. Instead, “it is an affirmative defense to reduce the amount of damages a plaintiff is entitled to after liability has been found.” Id. at 1190.
6 ECF 56-4.
7 ECF 62-3.
End of Document    © 2026 Thomson Reuters. No claim to original U.S. Government Works.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
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Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com