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Date: 07-09-2022
Case Style:
BASS VENTURE CORPORATION AND BASS MANAGEMENT GROUP, LLC vs DEVOM, LLC
Case Number: 2D20-2725
Judge:
Nelly Khouzam
Court:
DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT
On Appeal From The Circuit Court for Pinellas County
Thomas M.
Ramsberger
Judge
Plaintiff's Attorney:
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Defendant's Attorney: Shyamie Dixit and Robert L. Vessel of Dixit Law Firm,
Description:
Tampa, Florida - Business Law lawyer represented Appellants with in a dispute regarding hotel signage.
The parties operate two competing hotels on adjacent
properties on the same block. Although the hotels share road
access, only Bass's hotel fronts the main road; someone entering
from that side would have to proceed around Bass's hotel in order
to reach Devom's hotel.
3
At the shared point of ingress and egress from the main road,
a single monument displayed signage for both hotels. Because the
monument was located on Bass's property, Devom had obtained a
recorded easement giving it the perpetual right to install and
maintain its own signage on the monument, which signage could
not be modified without the consent of both parties.
Nonetheless, in March 2018 Bass removed the monument that
displayed both hotels' signage and replaced it with a new one
identifying only its hotel, not Devom's. As a result, someone driving
by the block on the main road would not see a sign for Devom's
hotel, only Bass's. So Devom sued Bass, seeking a declaration of
its rights under the easement, the replacement of the sign, and lost
profits for the period that the sign was removed.
At the bench trial, to support its lost profits claim, Devom
offered various financial documents from 2016-2017, including tax
returns and profit-and-loss statements. It also submitted
"statistical reports" from 2015-2018 setting forth its occupancy data
and revenues—but not expenses or profits—for each year.
Devom's damages calculation began with tripling its average
daily revenue, based on its principal's "estimate" that the missing
4
sign prevented Devom from renting three rooms per day. That
value was then multiplied by the number of days the sign was
down. In all, Devom sought nearly $150,000 in lost profits from the
March 2018 sign removal through the July 2020 trial.
Bass's counsel asserted that this evidence was insufficient to
permit an award of lost profits under settled law requiring evidence
of expenses or profits, not just revenues. In support, he pointed to
Devom's principal's admission that when a room is not rented, the
hotel's expenses are lower too, not just its revenues, because, for
example, an unrented room uses less utilities and does not require
cleaning services like a rented room does.
Acknowledging that Bass's argument in this regard was "well
taken," the court declined to award Devom the claimed amount of
its lost revenues. Instead, the court ruled without explanation that
"at best, a 50 percent margin is available" for Devom, cutting
Devom's demand in half and then "basically round[ing] that to a
$75,000" award for the period the sign was removed. Bass's motion
for rehearing, which again challenged Devom's failure to admit
evidence of its expenses or profits for the relevant period of time,
was denied. This appeal followed.
5
ANALYSIS
"The question of the methodology employed in calculating
damages . . . involves a question of law that we review de novo."
ICMfg & Assocs. v. Bare Board Grp., 238 So. 3d 326, 335 (Fla. 2d
DCA 2017). "If the trial court employed the correct measure of
damages, we review the damages award for support by competent,
substantial evidence." Asset Mgmt. Holdings, LLC v. Assets
Recovery Ctr. Invs., LLC, 238 So. 3d 908, 911 (Fla. 2d DCA 2018).
Generally, a business seeking to recover lost profits "must
prove that 1) the defendant's action caused the damage and 2) there
is some standard by which the amount of damages may be
adequately determined." W.W. Gay Mech. Contractor, Inc. v.
Wharfside Two, Ltd., 545 So. 2d 1348, 1351 (Fla. 1989). In
applying the second prong, Florida courts have held that "[e]vidence
pertaining to loss of income or gross receipts, without specific
evidence concerning expenses, is inadequate to prove lost profits."
HCA Health Servs. of Fla., Inc. v. CyberKnife Ctr. of the Treasure
Coast, LLC, 204 So. 3d 469, 472 (Fla. 4th DCA 2016) (citing E.T.
Legg & Assocs. v. Shamrock Auto Rentals, Inc., 386 So. 2d 1273,
1274 (Fla. 3d DCA 1980) ("As to the damages, the only evidence
6
presented pertained to income or gross receipts, not profits, and
testimony concerning expenses did not establish specific dollar
amounts. The evidence was therefore inadequate to prove lost
profits.")).
"Under Florida law, 'an inability to establish the amount of lost
profits with absolute exactness will not defeat recovery.' " Del Monte
Fresh Produce Co. v. Net Results, Inc., 77 So. 3d 667, 675 (Fla. 3d
DCA 2011) (quoting Nat'l Papaya Co. v. Domain Indus., 592 F.2d
813, 818 (5th Cir. 1979)). "However, the countervailing rules
require 'reasonable certainty' in the proof of those damages and the
assumptions underlying them." Id. (quoting Nat'l Papaya Co., 592
F.2d at 822). "Damages cannot be based upon speculation or
guesswork, but must have some reasonable basis in fact." Id.
(quoting Smith v. Austin Dev. Co., 538 So. 2d 128, 129 (Fla. 2d DCA
1989)).
Here, the trial evidence was insufficient as a matter of law to
support the award of lost profits because it addressed only revenues
from the relevant period of time, not expenses—or, consequently,
profits. The financial documentation adduced in support of the
award consisted of (1) "statistical reports" of room occupancy and
7
revenues from 2015-2018, (2) partnership tax returns from 2016-
2017, and (3) profit-and-loss statements from 2016-2017. The only
evidence addressing the period of time since the March 2018 sign
removal at issue is the 2018 statistical report, which contains no
information relating to expenses or profits, only revenues.
Indeed, at trial, Devom's principal expressly agreed that
Devom's "damages are based on a loss of revenue not a loss of
profit." In his words, "[t]he numbers that I'm providing for my
losses are based on gross revenues, not net profits." Even though he
admitted that Devom's 2018 and 2019 tax returns had already been
prepared at the time of the July 2020 trial, neither return was
offered into evidence. And although Devom's principal also
admitted that the hotel's expenses were lower when rooms were not
rented, he declined to give specific figures when asked. Thus,
Devom failed to satisfy the settled requirement of providing evidence
of expenses to support the lost profits award. See HCA Health
Servs., 204 So. 3d at 472; E.T. Legg & Assocs., 386 So. 2d at 1274.
Notably, this case starkly illustrates the reason for the
requirement. Devom's principal candidly testified that the reason it
was declining to provide evidence of its expenses was that "each
8
year expenses can go up. I can have a water boiler go bad. My
gross—my net profit is not directly related to my gross revenue."
Consistent with that explanation, Devom's tax returns that
were admitted at trial reflected higher revenues but lower profits in
2017 than 2016. Devom's principal accordingly admitted that,
comparing 2017 to 2016, Devom "generated more revenue but . . .
made less money." Absent comparable evidence from the period of
time after the sign was removed, there is no way to tell whether that
trend continued or not. Thus, evidence of revenue without
corresponding evidence of expenses fails to answer the question of
whether profits were lost.
In addition to the absence of any evidence of expenses during
the relevant time period, the record also lacks support for at least
two critical components of the damages calculation. First, Devom's
principal never provided any basis for his foundational assumption
that the hotel lost revenue from three rooms per day during the
period the sign was removed. When pressed on the basis for the
three-rooms estimate underpinning the entire damages calculation,
he offered only his general experience as a hotelier and his belief
that "if you don't have a sign on the road, whether you're a hotel, a
9
McDonald's, a Starbucks, or lawyer, people unfortunately won't
know you're there and they won't be able to come visit your
establishment." Although Devom's principal admitted that the hotel
was still able to be found online and by potential customers driving
from another direction not impacted by the sign removal, he
declined to provide any source for the three-rooms-per-day figure.
And second, there also is no record support for the trial court's
ruling that "at best, a 50 percent margin is available for" Devom and
thereby calculating the award by halving Devom's proposed
damages figure then "basically round[ing] that to a $75,000" award.
It is unclear how the trial court arrived at that finding, which does
not appear to bear any relationship to any of the testimony or
documentary evidence. Thus, the damages computation also lacks
sufficient certainty regarding the underlying assumptions and the
margin applied. See Del Monte, 77 So. 3d at 675.
Absent extraordinary circumstances, the appropriate remedy
for a failure to admit sufficient evidence to support an award of lost
profits is a reversal of the award. See, e.g., Asset Mgmt. Holdings,
238 So. 3d at 912-13 (reversing lost profits award because "[t]he
burden of proving damages rested solely with the plaintiff entities,"
10
who failed to carry it); see also Tracey v. Wells Fargo Bank, N.A.,
264 So. 3d 1152, 1164 (Fla. 2d DCA 2019) ("The general prohibition
in such cases against 'second bites at the apple' is a sound one that
is subject only to the exception of extraordinary circumstances.").
Outcome: Because no extraordinary circumstances are apparent here,
we accordingly reverse the lost profits award and remand with
instructions for the trial court to enter judgment in favor of Bass on
Devom's claim for lost profits. The final judgment is otherwise
affirmed.
Plaintiff's Experts:
Defendant's Experts:
Comments: