Zayre Corp. v. Creech
497 So.2d 706, 1986 Fla. App. LEXIS 10478, 11 Fla. L. Weekly 2345 (1986)
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Rule of Law:
When an employee is wrongfully discharged, the damages they can recover are the unpaid contract salary for the unexpired term, less any amount the employee actually earned or could have earned through reasonable diligence in other employment. If the employee's subsequent earnings exceed the amount due under the breached contract, their recovery is limited to nominal damages.
Facts:
- James R. Creech had an oral contract for one year of employment with Zayre Corporation, running from June 1, 1984, to May 31, 1985.
- Zayre terminated Creech's employment in September 1984, prior to the end of the contract term.
- Within ten weeks of his termination, Creech secured new employment with a company called Richway.
- Creech's new salary at Richway for the remainder of the original contract period exceeded the salary he would have been due from Zayre.
Procedural Posture:
- James R. Creech sued Zayre Corporation in a Florida trial court for breach of an oral employment contract.
- The trial court found in favor of Creech and awarded him damages for unpaid salary and a bonus.
- The trial court rejected Zayre's defense that Creech's damages were fully mitigated by his new employment.
- Zayre Corporation, as appellant, appealed the final judgment to the District Court of Appeal of Florida, Fourth District. Creech is the appellee.
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Issue:
Does a wrongfully discharged employee's subsequent earnings, which exceed the unpaid salary from the breached contract for the remainder of the term, reduce the former employer's liability to only nominal damages?
Opinions:
Majority - Downey, J.
Yes, a wrongfully discharged employee's recovery is limited to nominal damages when their earnings from subsequent employment exceed the amount owed under the breached contract. The purpose of damages in a breach of contract action is to place the injured party in the same financial position they would have occupied had the contract been fully performed, not to provide a windfall. While the prima facie measure of damages is the contract salary for the unexpired term, this amount is subject to reduction based on the employee's duty to mitigate. This duty requires the employee to seek other employment, and any earnings from such employment are deducted from the potential damage award. Because Creech earned more at his new job with Richway than he would have at Zayre for the remainder of the contract term, his damages were completely mitigated. Therefore, he is entitled to recover only nominal damages to acknowledge the breach of contract.
Analysis:
This case reinforces the fundamental contract law principle of mitigation of damages specifically within the employment context. It clarifies that mitigation is not merely a partial offset but can entirely eliminate compensatory damages if the wrongfully discharged employee is made financially whole or better off by securing new, higher-paying employment. This precedent establishes that a breach of contract, while legally cognizable, does not automatically entitle the non-breaching party to the full contract price if their actual financial losses are non-existent. The ruling prevents a discharged employee from receiving a 'double recovery'—collecting damages from a former employer while also earning a higher salary elsewhere.
