Florida Business Litigation: Lost Profits as Damages
A breach of contract, or any other type of business tort, can cause serious damage to a company. The affected business may not be able to operate at full capacity, or at all, for an extended period of time due to the bad actions of another party. In Florida, companies are entitled to recover for the full extent of their damages, and in many case that includes recovery for lost profits. If you believe that your business has lost out on profits because of the negligent actions of another party, please contact an experienced West Palm Beach commercial litigation attorney for immediate legal assistance.
The Standard for Recovering Lost Profits
The burden of proof for recovering lost profits as damages falls on the plaintiff. Florida courts use what is known as a ‘reasonable certainty’ standard to determine whether or not lost profits can be awarded in a legal claim. This standard is well illustrated in the Florida Supreme Court case of WW Gay Mech Contractor v. Wharfside Two LLC. In this case, a group of investors formed the company ‘Wharfside Two’ with the goal of building and operating a hotel property in Jacksonville. Wharfside Two contracted WW Gay Mechanical to construct the hotel property’s water drainage and pipe system. WW Gay completed the project, and the hotel opened on time, but there were immediately major issues with pipe leakage. There were also many customer reports of unpleasant odors coming from the pipes. The owners of Wharfside Two were dissatisfied with pipe work and decided to withhold a large payment from WW Gay. This led to the contractor to sue for the payment, and the hotel operators immediately countersued for lost profits associated with the leaks and odors. When ruling on the issue of lost profits, the Supreme Court of Florida, citing the case of Twyman v. Roell, articulated the following standard:
- The plaintiff must prove that the defendant’s actions were the cause of the damages; and
- There must be a reasonably clear standard set forth to determine the amount of the lost profits with adequate certainty.
The court noted that there was reputable evidence provided that showed that the odor from the pipes had caused a reduced rate of hotel room occupancy. The court allowed the use of expert testimony, along with reliable economic analysis, to determine the extent to which profits were lost. In this case, that court ruled that there could be a reasonably certain determination as to the total amount of lost profit damages. This was noteworthy because this was a brand new hotel, and the operators could not point back to historical profit data. However, the court ruled that even new businesses can be entitled to lost profits. Cases involving a company’s loss of profits are almost always extremely complex. The defense will typically fiercely dispute any claims of loss profits by trying to make them appear ‘too speculative’.
Need Legal Assistance?
At Pike & Lustig, LLP our attorneys have extensive experience protecting the rights of Florida companies. Your business deserves the full available recovery for any damages that have been sustained. If you have any questions about recovering lost profits as damages in Florida, please contact our West Palm Beach office today to schedule a free initial legal consultation.