Tag Archives: FDUTPA

SUBSEQUENT PURCHASER CAN ASSERT CLAIMS FOR CONSTRUCTION DEFECTS

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Can a subsequent purchaser pursue construction defect claims relating to the original construction of the property?  This was the threshold issue on a motion for summary judgment by a drywall manufacturer against a subsequent purchaser of a home in Karpel v. Knauf Gips KG, 2022 WL 4366946 (S.D. Fla. 2022).  This matter deals with the defective Chinese drywall that was installed in homes years ago.  The plaintiffs, which were subsequent purchasers of a home, sued the manufacturer of the defective drywall for various theories including negligence, negligence per se, strict liability, breach of express and/or implied warranty, private nuisance, unjust enrichment, and Florida’s Deceptive and Unfair Trade Practices Act.

The trial court noted, from the onset, that Florida does NOT have a subsequent purchaser rule that prohibits subsequent purchasers from asserting construction defect claims. With this consideration in mind, the trial court went through the claims the plaintiff, as a subsequent purchaser, asserted against the manufacturer to determine whether they were viable claims as a matter of law.

Negligence Claim

The trial court found that a subsequent purchaser could sue in negligence.  “Florida courts have long allowed subsequent purchasers to sue for negligence including in construction defect litigation.”  Karpel, supra, at *2.

Negligence Per Se and Strict Liability Claims

The trial court held that the plaintiff’s negligence per se and strict liability claims were duplicative. Both could not stand; for this reason, the court entered summary judgment as to the duplicative negligence per se claim. “Strict liability means negligence as a matter of law or negligence per se, the effect of which is to remove the burden from the user of proving specific acts of negligence.” Karpel, supra, at *3 (quotation and citation omitted).

A subsequent purchaser could pursue a strict liability claim against a manufacturer.  “[A] manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being.”  Karpel, supra, at *4 (quotation and citation omitted).

Even Section 402A of the Second Restatement of Torts, adopted by Florida’s Supreme Court, provides: “(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm caused to the ultimate user or consumer, or to his property, if (a) the seller is engaged in the business of selling such product, and (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.” Karpel, supra, at *4.

There are, however, limits on strict liability.

“First, Florida disallows recovery in tort where plaintiffs only claim economic losses such as ‘damages for inadequate value, costs of repair, and replacement of the defective product, or consequent loss of profits—without any claim of personal injury or damage to other property.” Karpel, supra, at *4 (citation omitted).

“Second, Florida courts will disallow recovery for strict liability where the purchaser was subject to the common law doctrine of caveat emptor.”  Karpel, supra, at *4.

Thus, a subsequent purchaser’s strict liability claim could be pursued against a manufacturer provided such damages are not barred by the economic loss rule or the doctrine of caveat emptor (which applies to commercial property and property purchased at judicial auction sales).  Karpel, supra, at *4.

Breach of Implied Warranty

The trial court found that a subsequent purchaser could NOT sue a manufacturer for breach of implied warranty.  “[I]t is abundantly clear that in cases like these, where no contractual relationship between a subsequent purchaser and a manufacturer exists, the former’s recourse is a claim for strict liability.” Karpel, supra, at *4.

Breach of Express Warranty

While a contractual relationship is typically required for breach of express warranty, this requirement is relaxed if the express warranty is intended to benefit subsequent purchasers.  “A manufacturer’s liability for breach of an express warranty derives from, and is measured by, the terms of that warranty.”  Karpel, supra, at *4 (quotations and citation omitted).  However, in this case, plaintiff’s breach of express warranty claim failed because the plaintiff never introduced any express warranty into the record.

Private Nuisance

The trial court held that the subsequent purchaser could NOT pursue a private nuisance claim against the manufacturer.   To sustain a private nuisance claim, the plaintiff must prove that the defendant’s maintenance of the nuisance was the proximate cause of the plaintiff’s damages.  Karpel, supra, at *8.  “The Plaintiffs’ ownership and current control over the drywall conclusively forecloses them from arguing that the Defendants actively “maintain” the ‘nuisance’ they complain of.”  Id.

Unjust Enrichment

The trial court held that the subsequent purchaser could NOT pursue an unjust enrichment claim against the manufacturer.  An unjust enrichment claim requires the plaintiff to prove that the plaintiff conferred a direct benefit on the defendant. “The Plaintiffs conferred no direct benefit on the Defendant.” Karpel, supra, at *8 (finding that plaintiffs, as subsequent purchasers, obtained their homes from previous owners so the plaintiffs conferred no direct financial benefit on the manufacturer).

Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA)

The trial court found that a subsequent purchaser could theortetically pursue a FDUTPA claim. “Because the law is clear that a plaintiff need not have actually relied on the purported deceptive or unfair practice, the Court’s analysis need not go further….The Plaintiffs’ status as subsequent purchasers does not foreclose them from arguing that the Defendants’ practices violated FDUTPA.”  Karpel, supra, at *9.

However, the trial court noted that actual damages under FDUTPA may implicate the economic loss rule because actual damages under the statute “are the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties.”  Karpel, supra, at *9 (quotation and citation omitted). For this reason, the court ordered the plaintiff and defendant to submit supplemental briefing because if the economic loss rule is implicated, the FDUTPA claim will fail (due to the same limitations relating to the strict liability claim).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

UNRAVEL THE FACTS BEFORE ASSERTING FDUTPA AND TORTIOUS INTERFERENCE CLAIMS

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CMR Construction and Roofing, LLC v. UCMS, LLC, 2022 WL 3012298 (11th Cir.  2022) is an interesting opinion where a contractor asserted a Florida’s Deceptive and Unfair Trade Practices Act (known by its acronym “FDUTPA”) claim and tortious interference claims (with a contract and with an advantageous business relationship) against another contractor, i.e., a competitor, that were dismissed from the get-go. It is an opinion worthy of interest based on the claims asserted against a competitor.  Throwing around FDUTPA and tortious interference may sound good from an intimidation standpoint, but pleading and then proving these claims are a lot different than loosely throwing around these claims.  Before filing a lawsuit for FDUTPA and tortious interference, spend time unraveling the facts and the chronology. Do not rely on conclusory allegations simply to check the box regarding required elements to plead while ignoring the actual facts that support the allegations. These are fact-based claims and it is imperative the facts are fully known from on the onset so that they can be strategically pled and pursued.

In this matter, a contractor, the plaintiff, was hired by a condominium association around April 2018 to repair damage caused by a hurricane which included roofing work. The association was going to have its insurer pay its contractor. In May 2020, the association hired a new contractor to perform the same work (the “new contractor”).  The association then directed the plaintiff to cease work since it hired the new contractor.

The plaintiff filed a lawsuit against the new contractor asserting claims for tortious interference and FDUTPA.  The allegations for these claims were as follows:

In support of [plaintiff’s] FDUTPA claim, [plaintiff] alleged that [new contractor] “wrongfully and unjustifiably interfere[d] with and procure[d] the breach” of [plaintiff’s] contractual and business relationships with the Association. In so doing, [plaintiff] relied on similar allegations to the ones supporting its claims for tortious interference—i.e., that [the new contractor] negotiated and contracted with the Association to perform work that [plaintiff] had a pre-existing contract to perform. [Plaintiff] further alleged that [the new contractor’s] conduct harmed [plaintiff] because [plaintiff] expended money and resources to perform its contractual obligations. As remedies for its FDUTPA claim, [plaintiff] sought both monetary damages and injunctive relief. [Plaintiff] also asserted a separate “cause of action” for temporary and permanent injunctions to prohibit [the new contractor] from performing any of the work that [plaintiff] was contracted to perform.

***

In support of [plaintiff’s] tortious interference claims, [plaintiff] alleged that [the new contractor] submitted a bid, as part of “a competitive bidding process,” to perform the same construction work [plaintiff] had a preexisting contract to perform. But, according to [plaintiff], [the new contractor] knew of [plaintiff’s contractual and business relationships with the Association. And, despite that knowledge, [the new contractor] negotiated and contracted with the Association to perform, and submitted building applications for, the same construction repair work that [plaintiff] had a pre-existing contract to perform. [Plaintiff] further alleged that [the new contractor] “did not have [a] justification or privilege in procuring” the Association to breach its contract with [plaintiff]. But [plaintiff] did not allege facts in support of [the new contractor’s] alleged knowledge or lack of justification.

CMR Construction and Roofing, supra.

 The trial court dismissed the plaintiff’s complaint leading to an appeal to the Eleventh Circuit Court of Appeals.

FDUTPA Claim

There were two components to the plaintiffs FDUTPA claim: injunctive relief and monetary damages. The Eleventh Circuit affirmed the trial court’s dismissal of the plaintiff’s FDUTPA claim.

“To state a claim for injunctive relief under FDUTPA, a plaintiff must allege: (1) “a deceptive [or unfair] act or practice in trade”; and (2) “that [p]laintiff is a person ‘aggrieved’ by the deceptive act or practice. And to state a claim for damages under FDUTPA, a plaintiff must allege: “(1) a deceptive act or unfair practice; (2) causation; and (3) actual damages.” CMR Construction and Roofing, supra (citations omitted).

To satisfy the first element for injunctive relief OR damage regarding a deceptive or unfair practice, “the plaintiff must allege that the relevant act or practice was harmful to a consumer.” CMR Construction and Roofing, supra.

Here, the new contractor–the competitor–was NOT a consumer.  The new contractor was a service provider “that sought to provide, and provided, construction services to the Association.” CMR Construction and Roofing, supra.  Also, the plaintiff alleged harm or damage to itself (also a provider of construction services) and not to any consumer of its construction services.

Tortious Interference Claims

The Eleventh Circuit also affirmed the trial court’s dismissal of the plaintiff’s tortious interference claims.  A main reason was that the plaintiff’s claims agianst the new contractor were conclusory allegations with no supporting facts. The plaintiff’s facts merely supported a competitive bidding process by a condominium association but did not support that the new contractor intentionally and unjustifiably interfered with plaintiff’s relationship or contract. This was fatal to the plaintiff’s tortious interference claims:

To establish a claim for tortious interference with a business relationship under Florida law, the plaintiff must establish the following elements: “(1) the existence of a business relationship[;] (2) knowledge of the relationship on the part of the defendant; (3) an intentional and unjustified interference with the relationship by the defendant; and (4) damage to the plaintiff as a result of the breach of the relationship.’ ”  And the elements of a cause of action for tortious interference with a contractual relationship under Florida law are: “(1) [t]he existence of a contract, (2) [t]he defendant’s knowledge of the contract, (3) [t]he defendant’s intentional procurement of the contract’s breach, (4) [a]bsence of any justification or privilege, [and] (5) [d]amages resulting from the breach.”

CMR Construction and Roofing, supra (internal citations omitted).

***

To support either claim, [plaintiff] was required to allege that [the new contractor] had knowledge of, and intentionally and unjustifiably interfered with, [plaintiff’s] relationship (either contractual or business) with the Association. As to the element of intentional and unjustifiable interference, if “a defendant interferes with a contract [or business relationship] in order to safeguard a preexisting economic interest of his own, the defendant’s right to protect his own established economic interest outweighs the plaintiff’s right to be free of interference, and his actions are usually recognized as privileged and nonactionable.”  But the defendant cannot do so by improper means.  “In other words, the privilege [to interfere] does not encompass the purposeful causing of a breach of contract” or business relationship. 

CMR Construction and Roofing, supra (internal citations omitted).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: PREVAILING PARTY ATTORNEY’S FEES UNDER A FDUTPA CLAIM ARE NOT MANDATORY

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In prior postings, I have discussed a Florida’s Deceptive and Unfair Trade Practices claim that goes by the acronym FDUTPA.   You can review the posts here, here, and here.

There are times a FDUTPA claim is asserted to try to trigger an argument for statutory attorney’s fees.  However, a recent case demonstrates that attorney’s fees under a FDUTPA claim are permissive, meaning the court has discretion to award attorney’s fees OR not award attorney’s fees to the prevailing party.  The case talks about factors the trial court may consider to determine an award of attorney’s fees to a prevailing party.

The takeaway is that attorney’s fees under a FDUTPA claim are not mandatory and that asserting a FDUTPA claim may not give you the leverage you think due to the permissive nature of prevailing party attorney’s fees and, of course, the fact such claims are not easy to prove.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

ALLEGING AND PROVING A FLORIDA DECEPTIVE AND UNFAIR TRADE PRACTICES ACT (FDUTPA) CLAIM

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When it comes to construction disputes, a Florida Deceptive and Unfair Trade Practices Act (known by its acronym “FDUTPA”) claim is not commonly asserted.  A FDUTPA claim is a statutory claim under Florida Statute s. 501.201 en seq.  This claim is NOT easy to prove, particularly in the construction context.  Sometimes, a party will assert a FDUTPA claim to create a basis for attorney’s fees; however, that basis cuts BOTH ways, i.e., you can be liable for fees if you fail to prove the FDUTPA claim.  In a construction dispute, a FDUTPA claim is one that really should be pled with caution after a party understands and fully considers what it MUST prove including the all-important consideration of how actual damages are determined under FDUTPA, which requires an actual loss.  Nevertheless, it is good to know what you need to prove to support a FDUTPA claim in case you believe you have facts that can support a FDUTPA claim and actual damages under FDUTPA (known as benefit-of-the-bargain damages).

A recent non-construction case out of the Eleventh Circuit Court of Appeals, Marrache v. Bacardi, U.S.A., Inc., 2021 WL 5175762 (11th Cir. 2021), demonstrates what a party needs to allege and prove to support a FDUTPA claim:

The three elements of a consumer claim under FDUTPA are: “(1) a deceptive act or unfair practice; (2) causation; and (3) actual damages.” Carriuolo v. Gen. Motors Co., 823 F.3d 977, 985–86 (11th Cir. 2016); accord City First Mortg. Corp. v. Barton, 988 So. 2d 82, 86 (Fla. Dist. Ct. App. 2008). An objective test is used to determine whether an act is deceptive under FDUTPA, and “the plaintiff must show that ‘the alleged practice was likely to deceive a consumer acting reasonably in the same circumstances.’ ” Carriuolo, 823 F.3d at 983–84 (quoting State, Office of the Att’y Gen. v. Com. Com. Leasing, LLC, 946 So. 2d 1253, 1258 (Fla. Dist. Ct. App. 2007)); accord Zlotnick v. Premier Sales Grp., Inc., 480 F.3d 1281, 1284 (11th Cir. 2007). To establish an unfair practice, the plaintiff must show that it is “one that ‘offends established public policy’ and one that is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.’ ” PNR, Inc. v. Beacon Prop. Mgmt., Inc., 842 So. 2d 773, 777 (Fla. 2003) (quoting Samuels v. King Motor Co. of Fort Lauderdale, 782 So. 2d 489, 489 (Fla. Dist. Ct. App. 2001)). Actual damages under FDUTPA “are measured according to ‘the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties.’ ” Carriuolo, 823 F.3d at 986 (quoting Rollins, Inc. v. Heller, 454 So. 2d 580, 585 (Fla. Dist. Ct. App. 1984)). A plaintiff, however, cannot state a cause of action under FDUTPA if the consumer fails to plead that they suffered actual damages. See Macias v. HBC of Florida, Inc., 694 So. 2d 88, 90 (Fla. Dist. Ct. App. 1997) (holding that plaintiff failed to state a cause of action under FDUTPA as she suffered no actual damages and affirming dismissal of complaint with prejudice). Indeed, “[t]he members of [a] putative class who experienced no actual loss have no claim for damages under FDUTPA.” Rollins, Inc. v. Butland, 951 So. 2d 860, 873 (Fla. Dist. Ct. App. 2006)). FDUTPA “does not provide for the recovery of nominal damages, speculative losses, or compensation for subjective feelings of disappointment.” Barton, 988 So. 2d at 86 (quoting Rollins, 951 So. 2d at 873).

Marrache, 2021 WL at *8 (explaining FDUTPA “requires an aggrieved person to suffer actual damages”).

FDUTPA further includes a safe harbor provision that “provides that FDUTPA does not apply to ‘[a]n act or practice required or specifically permitted by federal or state law.’”   Id. at *8 quoting Fla.Stat. s. 501.212(s).

Marrache involved the sale of Bombay Sapphire gin where the gin markets and labels that it contains botanical ingredients including “grains of paradise.”  A class action was filed claiming this violated FDUTPA.  The defendants moved to dismiss the lawsuit arguing that the plaintiff did not allege how grains of paradise violated FDUTPA or the actual damages suffered.  The defendants also argued that regardless of the allegations the plaintiff’s FDUTPA claim is barred by the safe harbor provision since the Food and Drug Administration identified grains of paradise as a substance generally recognized as safe.  The trial court agreed with the defendants and dismissed the complaint.

The Eleventh Circuit Court of Appeals agreed with the trial court.  The defendant failed to demonstrate how the plaintiff’s compliance with federal law falls outside of FDUTPA’s safe harbor provision when grains of paradise is generally recognized as safe by the Food and Drug Administration.  Marrache, 2021 WL at *8 (“[A]n act specifically permitted by federal law cannot serve as the basis for a FDUTPA claim….Because grains of paradise is a substance specifically permitted under federal law to be included in alcohol, FDUTPA’s safe harbor applies and [the plaintiff’s] FDUTPA claims against Defendants are barred by the safe harbor provision of FDUTPA.”).

Moreover, as an aside, the Eleventh Circuit held that the plaintiff had NOT alleged facts to state a plausible claim for suffering actual damages under FDUTPA.  Marrache, 2021 WL at *10 (“[E]ven if the sale of Bombay containing grains of paradise is illegal under Florida law, Bombay certainly is not ‘worthless’ in other states, as it is permitted to be sold under federal law and is thus not valueless under the benefit-of-the-bargain theory for actual damages under FDUTPA….Indeed, FDUTPA does not provide for the recovery of nominal damages, speculative losses, or compensation for subjective feelings of disappointment. Because FDUTPA requires an aggrieved person to suffer actual damages, we conclude that [the plaintiff] has not pled a plausible claim for actual damages under FDUTPA.’’) (internal citations and quotation omitted).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

DO YOU HAVE A FLORIDA’S DECEPTIVE AND UNFAIR TRADE PRACTICES ACT CLAIM

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In previous articles, I discussed Florida’s Deceptive and Unfair Trade Practices Act referred to as “FDUTPA”…but, it has been awhile.  (For more information on FDUTPA, check here and here.)  Now is as good of a time as any to discuss it again because FDUTPA provides a private cause of action and, perhaps, there may be a consideration as to whether such claim can be (or is) properly asserted in the context of your circumstances.

FDUTPA is a statutory scheme designed, “To protect the consuming public and legitimate business enterprises from those who engage in unfair methods of competition, or unconscionable, deceptive or unfair acts or practices in the conduct of any trade or commerce.”  Fla. Stat. s. 501.201(2).   In doing so, FDUTPA authorizes three avenues of legal recourse against an offending party:  “(1) declaratory relief; (2) injunctive relief; and (3) [monetary] damages.”   Webber v. Bactes Imaging Solutions, Inc., 45 Fla. L. Weekly D125a (Fla. 2d DCA 2020);Fla. Stat. s. 501.211.

“An unfair practice is ‘one that “offends established public policy” and one that is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.’”  Webber, supra, (citation omitted).

“A deceptive practice is one that is ‘likely to mislead’ consumers.” Webber, supra, n.6 (citation omitted).

By way of example, even though this is not a construction dispute, in Webber, the plaintiff pursued a FDUTPA claim seeking declaratory relief, injunctive relief, and damages — the three avenues of relief the statute provides.  The plaintiff claimed that the defendant overcharged for copies of medical records when the request for records was made by a patient’s lawyer versus the patient directly.  The defendant charged for copies $1 per page after the first 25 pages when the request for medical records was made by the patient’s lawyer.  The plaintiff claimed this violated law that set the maximum rate at $.25 per page for patients who request such records.  The defendant countered that it was able to charge higher because the request was made by a lawyer, an “other entity,”  instead of the patient directly.  The trial court found no FDUTPA violation occurred.   The Second District Court of Appeal reversed finding differently:

We conclude that [defendant’s] conduct in charging the “other entities” rate when a lawyer submits a request for copies of medical records on behalf of his or her client, the patient, is an unfair act or practice…. The only way the patient — who is being represented by legal counsel — can obtain his or her records is to either pay the “other entities” rate merely because the medical records request was submitted by his or her lawyer or for the patient to submit a separate medical records request directly to the practitioner. But [defendant] has already been instructed by the trial court that its policy of charging the “other entities” [higher] rate in such circumstances violates rule 64B8-10.003. And requiring a patient to jump over an additional hurdle to obtain his or her own medical records — where that patient has already signed a release indicating that the patient gives express permission for the records to be released to the lawyer — is a practice that we construe to be offensive to public policy. We likewise conclude that it is “oppressive, unscrupulous or substantially injurious to consumers” where a party frustrates patient access to medical records by charging higher than permissible rates for copies despite already being instructed that it was not permitted to do so.

Webber, supra.

Clearly, the actual facts here are not construction-related.  But do the facts, or the finding that the facts constituted an “unfair trade practice” under FDUTPA, give you a basis that a FDUTPA claim applies to the facts in your case, or conversely, should not apply?  Although the Second District did not need to decide whether the facts also constituted a deceptive practice, it footnoted that the facts likely did rise up to a deceptive practice.  Webber, supra, n.6.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

YOU DON’T HAVE TO BE A CONSUMER TO ASSERT A FDUTPA CLAIM

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shutterstock_519663268A few years ago, the Fourth District Court of Florida rendered an opinion in Caribbean Cruise Line, Inc. v. Better Business Bureau of Palm Beach County, Inc., 169 So.3d 164 (Fla. 4th DCA 2015) regarding Florida’s Deceptive and Unfair Trade Practices Act (referred as to “FDUTPA”) (Florida Statute s. 501.201 et seq.).   This case held that a party can assert a FDUTPA claim even though the party is NOT a consumer.  The party still has to prove there was an injury to consumers in filing such claim, but again, the party can bring the claim even though it is NOT a consumer.  Caribbean Cruise Line, 169 So.3d at 169 (“[W]hile the claimant would have to prove that there was an injury or detriment to consumers in order to satisfy all of the elements of a FDUTPA claim, the claimant does not have to be a consumer to bring the claim.”).  See also Cemex Construction Materials Florida, LLC v. Armstrong World Industries, Inc., 2018 WL 905752, *15 (M.D.Fla 2018) (relying on Caribbean Cruise Line to find that even though the plaintiff does not need to be a consumer, the plaintiff still must prove an injury to consumers to satisfy elements of a FDUTPA claim).

 

“To state a claim under FDUTPA, a party must allege (1) a deceptive or unfair trade practice; (2) causation; and (3) actual damages.”  Cemex Construction Materials Florida, LLC v. Armstrong World Industries, Inc., 2018 WL 905752, *14 (M.D.Fla 2018).  

 

An unfair practice is one that is unethical, immoral, oppressive, unscrupulous, or substantially injurious to consumers.  Caribbean Cruise Line, 169 So.3d at 169 quoting PNR, Inc. v. Beacon Prop. Mgmt., Inc., 842 So.2d 773, 777 (Fla. 2003). 

 

A deceptive practice is an omission or representation that is likely to mislead a consumer acting reasonably under the circumstances to the consumer’s detriment.  Id.   

 

Naturally, both definitions have fairly expansive scopes and applications. And, with the Caribbean Cruise Line’s confirmation that a plaintiff does not actually need to be a consumer to initiate such a claim renders FDUTPA  a powerful vehicle when it comes to unfair or deceptive trade practices.  

 

If you have questions or issues regarding the breadth and application of FDUTPA, and unfair and deceptive trade practices, consult a lawyer that understands the nuances of such claims.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

ATTORNEY’S FEES UNDER (A) FLORIDA’S DECEPTIVE AND UNFAIR TRADE PRACTICES ACT AND (B) OFFERS OF JUDGMENT

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In Florida, a party can recover attorney’s fees if it has a contractual or statutory basis. If a party has neither a contractual or statutory basis to recover attorney’s fees, another vehicle is to serve an Offer of Judgment (also known as a Proposal for Settlement).  Whether there is an argument to recover attorney’s fees is an important consideration.

 

A. Attorney’s Fees Under The Florida Deceptive and Unfair Trade Practices Act

 

The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) is a consumer-protection related law designed to allow parties to sue other parties for deceptive and unfair trade or business practices. FDUTPA is discussed in more detail in https://floridaconstru.wpengine.com/actual-damages-under-floridas-deceptive-and-unfair-trade-practices-act/. There are certain circumstances when asserting a FDUTPA claim is worthwhile and should be explored such as when a party is looking for a statutory basis to recover attorney’s fees.

 

FDUTPA contains a statutory basis to recover attorney’s fees. Section 501.2105 of FDUTPA provides in relevant part:

 

 “(1) In any civil litigation resulting from an act or practice involving a violation of this part, except as provided in subsection (5), the prevailing party, after judgment in the trial court and exhaustion of all appeals, if any, may receive his or her reasonable attorney’s fees and costs from the nonprevailing party.”

 

 

The reason the word “may” is highlighted is because this is permissive, not mandatory, language. In other words, it is not automatic or mandatory that attorney’s have to be awarded to the prevailing party, but they could (i.e., may) be awarded. This is an important distinction. However, recently, Florida decisions have indicated that attorney fees should be mandatorily awarded to the prevailing party in a FDUTPA action.

 

Recently, in Bull Motors, LLC v. Alicia Borders, 39 Fla. L. Weekly D28a (Fla. 3d DCA 2013), the Third District stated:

 

“FDUTPA’s attorneys’ fees provision recognizes the policy of protecting consumers from unfair and deceptive trade practices and the need to attract private attorneys to take such cases by assuring them of a legal fee proportionate to their effects if their clients prevail. Such an award requires that the client prevail by recovering a judgment and, if there are counterclaims, by recovering a net judgment in the entire case. There is no express requirement of proportionality between the amount of the FDUTPA judgment and the attorney’s fees and costs incurred in obtaining the judgment.”

Bull Motors, supra (internal quotations omitted).

 

 

Bull Motors relied on the Florida Supreme Court’s decision in Diamond Aircraft Indus., Inc. v. Horowitch, 107 So.3d 362 (Fla. 2013).  In Diamond Aircraft, a plaintiff asserted a FDUTPA claim against a defendant. However, it was determined that FDUTPA did not apply because Arizona law, not Florida law, governed the case. Thus, the defendant prevailed under the plaintiff’s FDUTPA claim. A question certified to the Florida Supreme Court to answer was whether FDUTPA entitled a prevailing party to attorney’s fees if the court determines that FDUTPA does not apply to the case because the substantive law of another state (in this case, Arizona) applied. The Court stated that it did (or answered the question in the affirmative) holding that by a plaintiff asserting a FDUTPA claim, it exposes itself to both the benefits and potential consequences of the statute. Further, the Court expressed: “Under FDUTPA, a prevailing party is entitled to reasonable attorney’s fees and costs in civil litigation arising from a violation of that act ‘after judgment in the trial court and exhaustion of all appeals.’” Diamond Aircraft, supra, at 370 quoting Fla.Stat. s. 501.2105.

 

Hence, even though the statute contains permissive language, there is strong legal authority that would mandatorily entitle a prevailing party to recover attorney’s fees. This cuts both ways. This means that a plaintiff could expose itself to attorney’s fees by improperly asserting a FDUTPA claim without facts to support a deceptive or unfair trade practice or without evidence to support actual damages as provided under the statute.  Plaintiffs need to be cognizant of this before asserting a FDUTPA claim.

 

B. Attorney’s Fees By Serving Offers of Judgment

 

 

 

Moreover, Bull Motors discussed the vehicle to create an argument for the recoverability of attorney’s fees known as offers of judgment or proposals for settlement (“Offer of Judgment”). The Offer for Judgment statute in Florida Statute 768.79 provides in material portion:

 

“In any civil action for damages filed in the courts of this state, if a defendant files an offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled to recover reasonable costs and attorney’s fees incurred by her or him or on the defendant’s behalf pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than such offer….If a plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall be entitled to recover reasonable costs and attorney’s fees incurred from the date of the filing of the demand.”

 

 

In a nutshell, a defendant can recover its attorney’s fees if it serves an Offer of Judgment and the plaintiff gets a $0 judgment against the defendant or the plaintiff gets a judgment of at least 25% less than the offer. For example, and using simple math, let’s say the defendant serves an Offer of Judgment for $100,000 and the plaintiff obtains a net judgment against the defendant for $50,000. In this situation, the defendant could be entitled to its attorney’s fees from the date of the Offer of Judgment and forward since the plaintiff obtained a judgment of at least 25% less than its $100,000 Offer.

 

And, if a plaintiff serves an Offer of Judgment, it can recover its attorney’s fees if gets a net judgment of at least 25% greater than the Offer. Let’s say the plaintiff serves a $100,000 Offer of Judgment and recovers a net judgment against the defendant for $150,000. In this situation, the plaintiff could be entitled to its attorney’s fees from the date of the Offer of Judgment and forward since the plaintiff obtained a judgment of at least 25% greater than its $100,000 Offer.

 

However, serving Offers of Judgment are not sure-things under Florida law that will guarantee a party to attorney’s fees even if the math (shown above) works. There are numerous Florida decisions that find defects in Offers of Judgment (including technical defects) that ultimately prevent a party from recovering its attorney’s fees. Both Bulls Motor and Diamond Aircraft are examples of decisions whereby the Courts found flaws in the Offers of Judgment. Offers of Judgment do not apply to claims for equitable relief, only claims for damages. Thus, parties need to be crystal clear that the Offers only apply to claims for damages. But it is unfortunately not that simple. The Florida Supreme Court in Diamond Aircraft stated:

 

“Courts have also held that when a plaintiff seeks both monetary and nonmonetary relief, and a party makes a general offer of settlement, section 768.79 is not applicable. The reasoning adopted in those decisions is that strict construction of the phrase “any civil action for damages” in the offer of judgment statute does not include a claim for equitable relief, or one that involves claims for both monetary and nonmonetary relief.
***
We hold that section 768.79 does not apply to an action in which a plaintiff seeks both damages and equitable relief, and in which the defendant has served a general offer of judgment that seeks release of all claims.”
Diamond Aircraft, 107 So.3d at 373-74 (internal citations omitted); accord Bull Motors, supra (“The offer of judgment statute, section 768.79…does not apply to cases that, as here, involve a general offer seeking release of all claims in the case, both equitable and monetary.”).

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

“ACTUAL DAMAGES” UNDER FLORIDA’S DECEPTIVE AND UNFAIR TRADE PRACTICES ACT

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u dec prUnder Florida’s Deceptive and Unfair Trade Practices Act (“FDUTPA”), a party can only recover in principal what the statute refers to as “actual damages.” See Fla. Stat. s. 501.211(2) (“In any action brought by a person who has suffered a loss as a result of a violation of this part, such person may recover actual damages, plus attorney’s fees and court costs….”) However, the statute does not define the term actual damages and, thus, parties need to analyze Florida caselaw to understand the meaning of actual damages. This is important so parties know the damages covered under FDUTPA. A claim under FDUTPA is sometimes asserted in a construction-related dispute. Sometimes, it is asserted if a party is seeking an avenue to potentially recover attorneys’ fees.

 
Florida courts (or federal courts interpreting Florida law) have maintained that “actual damages” refer to the “difference in the market value of the product or service in the condition it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties. A notable exception to the rule may exist when the product is rendered valueless as a result of the defect-then the purchase price is the appropriate measure of damages.” Rollins, Inc. v. Butland, 951 So.2d 860, 869 (Fla. 2d DCA 2006) quoting Rollins, Inc. v. Heller, 454 So.2d 580, 585 (Fla. 3d DCA 1984).

 
This is similar to benefit of the bargain damages – the market value of the product represented minus the market value of the product delivered. See Gastaldi v. Sunvest Resort Communities, LC, 709 F. Supp. 2d 1299, 1304 (S.D.Fla. 2010).
Based on the way Florida cases define actual damages under FDUTPA, a party needs to prove its damages in accordance with this definition by analyzing the market value of the product represented versus the market value of the product actually received / delivered.

 

Examples of cases discussing the measure of actual damages under FDUTPA are as follows:

 

– Rollins v. Heller, 454 So.2d 580, 585 (Fla. 3d DCA 1984) – measure of damages would be the market value of the alarm system and the services alarm company agreed to provide [as represented] minus the market value of the alarm system and services actually provided [as delivered];

 

–Ft. Lauderdale Lincoln Mercury, Inc. v. Corgnati, 715 So.2d 311, 315 (Fla. 4th DCA 1998) –measure of damages would be the market value of the used BMW that was never in an accident and with a remote infrared opener [as represented] minus the market value of the BMW which had been in an accident and without remote infrared opener [as delivered];

 

– H&J Paving of Fla., Inc. v. Nextel, Inc., 849 So.2d 1099, 1102 (Fla. 3d DCA 2003) –measure of damages “would be the value of the product at the time of the sale based upon a useful life of approximately eight years [as represented] and [minus] the value of the product which would become obsolete within a few years [as delivered];”

 

– Gastaldi v. Sunvest Resort Communities, LC, 709 F. Supp. 2d 1299, 1307 (S.D.Fla. 2010)– measure of damages would be the difference in the market value of the condominium units with the condominium having a luxury sports club in 2009 [as represented] minus the market value of the condominium units without the condominium having a luxury sports club in 2009 [as delivered].

 

Notably, actual damages under FDUTPA does not include consequential-type damages (or damages other than those established by the measure provided above). See Dorestin v. Hollywood Imports, Inc., 45 So.3d 819, 824-25 (Fla. 4th DCA 2010) (FDUTPA does not allow for consequential damages or any other damages outside of actual damages); Orkin Exterminating Co., Inc. v. DelGuidice, 790 So.2d 1158, 1162 (Fla. 5th 2001) (actual damages do not include actual consequential damages). For example, lost profits or interest on payments would not be a recoverable consequential damage. See Rodriguez v. Recovery Performance & Marine, LLC, 38 So.3d 178 (Fla. 3d DCA 2010) and Siever v. BWGaskets, Inc., 669 F.Supp.2d 1286, 1294 (M.D.Fla. 2009).

 

Understanding actual damages in a FDUTPA claim is important prior to asserting a claim so that a party knows what is recoverable and what is not recoverable under FDUTPA. It is also important so that a party knows how to prove actual damages.

 

 

For more information on FDUTPA, please see:

https://floridaconstru.wpengine.com/attorneys-fees-under-a-floridas-deceptive-and-unfair-trade-practices-act-and-b-offers-of-judgment/

 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.