238 So. 3d 908
Fla. Dist. Ct. App.2018Background
- In 2003 AMH agreed orally to locate distressed mortgages, ARC (the plaintiff entities) to fund purchases, and AMH to service loans; collections were to reimburse AMH's costs, then ARC's capital, then split remaining proceeds 50/50.
- In November 2008 the parties orally agreed (the "walkaway agreement") that AMH would stop servicing and transfer active loan files to ARC and ARC would not pursue amounts AMH owed them.
- Six months after the transfer AMH mistakenly kept servicing ~170 loans (the disputed loans) and collected payments on them; ARC sued for breach of the walkaway agreement claiming ownership and damages for AMH's collections.
- The trial court found ARC owned the disputed loans, AMH breached the walkaway agreement, dismissed other claims and counterclaims, and reserved damages for a second bench trial; at the damages trial the court awarded ARC all monies AMH collected on the disputed loans after November 2008 and denied AMH a setoff for servicing costs.
- AMH moved for involuntary dismissal at the damages trial, arguing ARC failed to prove damages under the correct measure (lost profits net of costs ARC would have incurred); ARC offered only gross collections and contended AMH’s wrongdoing barred setoffs.
- The appellate court held ARC bore the burden to prove damages (including costs they would have incurred) and reversed the damages award, affirming other dispositional rulings and remanding for involuntary dismissal of the breach claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Correct measure of damages for breach of the walkaway agreement | ARC argued it was entitled to all collections AMH received on disputed loans and that AMH’s wrongdoing barred any setoff | AMH argued damages must reflect the position ARC would have occupied absent breach (lost profits), requiring deduction of costs ARC would have incurred servicing the loans | Held for AMH: court must restore plaintiff to position but for breach; plaintiff must prove lost profits net of costs, so gross-collections award without cost deductions was erroneous |
| Burden of proof on damages | ARC contended AMH should not receive setoffs and did not present costs ARC would have incurred | AMH contended ARC had burden to prove lost profits and associated costs; AMH offered to prove its servicing costs | Held for AMH: ARC bore burden to prove damages and failed to introduce necessary evidence of servicing costs, warranting involuntary dismissal |
| Denial of AMH’s motion for involuntary dismissal | ARC asserted damages were established by its damage memorandum and AMH’s conduct barred offsets | AMH argued lack of evidence on costs meant no competent proof of damages under lost-profits measure | Held for AMH: denial was error because no competent evidence supported damages; reversal and remand for involuntary dismissal required |
| Effect on other claims and ownership finding | ARC maintained alternate theories and other claims supported recovery | AMH argued issue-limited appeal on damages only | Held: appellate court affirmed dismissal of ARC’s alternative damage theories and AMH’s counterclaims and did not disturb trial court’s finding that ARC owns the disputed loans |
Key Cases Cited
- Del Monte Fresh Produce Co. v. Net Results, Inc., 77 So.3d 667 (Fla. 3d DCA 2011) (standards for reviewing damages measure and sufficiency of evidence)
- Rollins, Inc. v. Butland, 951 So.2d 860 (Fla. 2d DCA 2006) (elements of breach of contract include damages)
- Verandah Dev., LLC v. Gualtieri, 201 So.3d 654 (Fla. 2d DCA 2016) (damages restore nonbreaching party to position but for breach)
- Lindon v. Dalton Hotel Corp., 49 So.3d 299 (Fla. 5th DCA 2010) (nonbreaching party not entitled to be placed in better position than full performance)
- Montage Grp., Ltd. v. Athle-Tech Comput. Sys., Inc., 889 So.2d 180 (Fla. 2d DCA 2004) (plaintiff bears burden of proving lost profits)
- James Crystal Licenses, LLC v. Infinity Radio Inc., 43 So.3d 68 (Fla. 4th DCA 2010) (reversing lost-profits award where plaintiff failed to deduct general overhead expenses)
- Indian River Colony Club, Inc. v. Schopke Constr. & Eng'g, Inc., 619 So.2d 6 (Fla. 5th DCA 1993) (plaintiff must prove costs and expenses to deduct from income when calculating lost profits)
- Physicians Reference Lab., Inc. v. Daniel Seckinger, M.D. & Assocs., P.A., 501 So.2d 107 (Fla. 3d DCA 1987) (nonbreaching party bears burden to prove lost profits; breaching party's failure to present evidence does not relieve plaintiff of burden)
- Allard v. Al-Nayem Int'l, Inc., 59 So.3d 198 (Fla. 2d DCA 2011) (involuntary dismissal proper where inadequate proof of correct damages measure)
- St. Petersburg Hous. Auth. v. J.R. Dev., 706 So.2d 1377 (Fla. 2d DCA 1998) (plaintiff cannot get a second bite at proving damages after trial if no proof was offered)
- Teca, Inc. v. WM-TAB, Inc., 726 So.2d 828 (Fla. 4th DCA 1999) (reversing where plaintiff failed to prove expenses supporting lost-profits claim)