IN THE SUPREME COURT OF THE STATE OF FLORIDA. CASE NO. SC Third District Case Nos. 3D and 3D Lower Tribunal Case No.

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1 Filing # Electronically Filed 03/11/ :18:49 AM RECEIVED, 3/11/ :23:38, John A. Tomasino, Clerk, Supreme Court IN THE SUPREME COURT OF THE STATE OF FLORIDA CASE NO. SC Third District Case Nos. 3D and 3D Lower Tribunal Case No WATERWAYS PLAZA, LLC, Petitioner, vs. KATZ DELI OF AVENTURA, INC., Respondent. ON PETITION FOR REVIEW FROM THE DISTRICT COURT OF APPEAL FOR THE THIRD DISTRICT, STATE OF FLORIDA JURISDICTIONAL ANSWER BRIEF OF RESPONDENT KATZ DELI OF AVENTURA, INC. Scott Alan Orth, Esq. Florida Bar No LAW OFFICES OF SCOTT ALAN ORTH, P.A Sheridan Street Hollywood, FL Telephone: (305) Facsimile: (305) scott@orthlawoffice.com service@orthlawoffice.com (primary) eservicesao@gmail.com (secondary) Counsel for Respondent

2 TABLE OF CONTENTS Page TABLE OF AUTHORITIES... ii PREFACE... iv STATEMENT OF THE CASE AND OF THE FACTS... 1 A. Nature of the Case... 1 B. Course of the Proceedings... 1 C. Disposition in the Lower Tribunal... 2 SUMMARY OF THE ARGUMENT... 4 ARGUMENT... 5 I. The Petition should be denied because the decision does not conflict with Polyglycoat or Montage Group II. The Petition should be denied because the decision does not conflict with Zinn... 8 III. The Petition should be denied because the decision does not conflict with Pahokee Housing Authority or Polyglycoat CONCLUSION CERTIFICATE OF SERVICE CERTIFICATE OF COMPLIANCE i

3 TABLE OF AUTHORITIES Cases Page Aetna Life & Casualty Co. v. Little, 384 So. 2d 213 (Fla. 4th DCA 1980)... 3, 4, 6, 7 Aravena v. Miami-Dade County, 928 So. 2d 1163 (Fla. 2006)... 6 Chase Federal Savings and Loan Ass n v. Schreiber, 1984 Fla. LEXIS 3193 (Fla. July 26, 1984)... 5 Crossley v. State, 596 So. 2d 447 (Fla. 1992)... 6 Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 38 Fla. L. Weekly D 2511 (Fla. 3d DCA Nov. 27, 2013)... passim Montage Group, Ltd. v. Athle-Tech Computer Systems, Inc., 889 So. 2d 180 (Fla. 2d DCA 2004)... 5, 7, 8 Nielsen v. Sarasota, 117 So. 2d 731 (Fla. 1960) Pahokee Housing Authority, Inc. v. South Florida Sanitation Co., 478 So. 2d 1107 (Fla. 4th DCA 1985)... 9 Polyglycoat Corp. v. Hirsch Distributors, Inc, 442 So. 2d 958 (Fla. 4th DCA 1983)... 5, 6, 7, 9 Sostchin v. Doll Enterprises, Inc., 847 So. 2d 1123 (Fla. 3d DCA 2003)... 3, 4, 6 Young v. Cobbs, 83 So. 2d 417 (Fla. 1955)... 8, 10 Zinn v. GJPS Lukas, Inc., 695 So. 2d 499 (Fla. 5th DCA 1997)... 8, 9 ii

4 Constitutional Provisions Page Art. V, 3(b)(3), Fla. Const.... 5, 6 iii

5 PREFACE The following abbreviations and designations may appear in this brief: Op. or Opinion refers to the Third District s decision in the Appendix to the Petitioner s Amended Brief on Jurisdiction, reported as Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 38 Fla. L. Weekly D 2511 (Fla. 3d DCA Nov. 27, 2013). Pet. or Petition refers to the Amended Brief on Jurisdiction filed by Waterways, petitioning for certiorari review of the Third District s Katz Deli Opinion on the basis of an alleged conflict with decisions of other districts. Katz or Tenant refers to the Respondent/Plaintiff, Katz Deli of Aventura, Inc. Katz Deli in italics refers to the Third District s decision, of which Waterways is seeking review. Waterways or Landlord refers to the Petitioner/Defendant, Waterways Plaza LLC. iv

6 STATEMENT OF THE CASE AND OF THE FACTS A. Nature of the Case.-- Respondent Katz Deli of Aventura, Inc. ( Katz ) opposes the Petition for Review filed by its former Landlord, Waterways Plaza, LLC ( Waterways ), from a Third District decision affirming an award for lost profits against Waterways. The Landlord had engaged in grossly negligent or willful conduct that breached the lease and constructively evicted Katz from an attractive, well-equipped restaurant space in Aventura, Florida. (Op. 5, 8-9.) At issue here is the Third District s method of calculating Katz s damages under the unique facts and circumstances of this case. B. Course of Proceedings in the Lower Tribunal.-- Waterways had acquired the plaza, subject to Katz s below-market lease, just before severe roof leaks began in (Op. 3-4.) By failing to replace the roof, it caused the deli s space to become moldy and unfit for use as a restaurant. (Op. 5.) Waterways caused Katz s business to dwindle and its market value to slowly decline in 2002 and 2003, and effectively removed Katz s below-market, long term leasehold that could have been renewed through 2022.(Op.5-6, ) After Katz was effectively forced to move out, Waterways replaced the roof and quickly acquired replacement tenants who have continuously paid substantially higher rent. (Op. 4-5, 13.) The trial court found that Katz had been constructively evicted due to Waterways gross negligence in failing to maintain the roof, and that Waterways 1

7 had thereby breached the lease agreement. (Op. 5.) The court found that Katz was a successful, ongoing enterprise before Waterways caused Katz s business to slowly decline. (Op. 6.) After vacating the space, the Katz company remained intact and still had some inventory and goodwill in the community. It tried to reopen elsewhere but eventually ceased doing business. (Op. 12.) C. Disposition in the Lower Tribunal.-- Although evidence showed Katz s market value might have been $1.5 million, the trial court only awarded lost profits of about $800,000. (Op. 6-7.) This award was based on projected lost profits for the period from the constructive eviction in May of 2003 through the end of the initial lease term in April (Op. 7.) Notably, the court denied damages for the lease renewal terms that potentially ran through (Op. 7.) Both parties appealed the damages award to the Third District (where Waterways argued that the proper analysis would be market value, but that no damages should be awarded at all). (Op. 8.) The Third District upheld the award, explaining that the unique circumstances of this case where Katz s business had slowly declined but the Katz company was still intact and tried to reopen after the constructive eviction, and where it is impossible to determine when the business 1 Katz s damages were severely limited by the trial court and Katz is actually the aggrieved party in this regard. In addition to denying lost profits for the future lease terms, the trial court also denied recovery of out-of-pocket expenses Katz incurred due to the wrongful eviction, including pending food product purchases, destruction of equipment and inventory, and interest on business loans. (Op. 7.) 2

8 was eventually completely destroyed or what the date of loss would be under a market-value analysis required application of a lost-profits analysis. (Op. 12.) Even so, the lost profits ultimately awarded to Katz are very likely less than the market value of the business would have been prior to the leaks. (Op. 12 n.6.) The decision held: Under these unique circumstances, we hold that lost profits is a proper measure of damages because Waterways long-term continuing breach of the contract allowed Katz to stay in business for a year, but slowly depreciated the market value of that business, thus rendering an award of market value damages insufficient to make Katz whole (Op ), and market value... [would] leav[e] the plaintiff without an adequate recovery, would be completely inequitable, and is not the law in Florida under the facts. (Op. 11, 12.) Noting that Katz continued in business for months during and after the continuing acts of negligence, and even tried to reopen after the eviction, the Opinion harmonized its holding with its previous decisions (and with a decision of the Fourth District) by citing the reasoning in its prior Sostchin decision: Where, as here, a business continues after suffering from an act of negligence the business is entitled to recover the lost profits attributable to defendant s negligent act, but cannot recover both lost profits, and the market value of the business. Aetna Life & Casualty Co. v. Little, 384 So. 2d 213 (Fla. 4th DCA 1980). [e.s.] Sostchin v. Doll Enters., Inc., 847 So. 2d 1123, 1128 n.6 (Fla. 3d DCA 2003) (cited and quoted at Op. 11). Waterways then petitioned for review by this Court. 3

9 SUMMARY OF THE ARGUMENT The Opinion readily acknowledges that the Third District itself has said that the usual measure of damages is the market value of the business on the date of the loss, if the business is completely destroyed. It distinguishes that rule, however, because there is no way to pinpoint a specific date of loss to use in a market-value analysis here, where Katz slowly declined while continuing in business after the Landlord s acts of gross negligence and Katz even attempted to reopen in a different location after the constructive eviction, but eventually stopped operating. Far from conflicting with the general rule, the Opinion simply distinguishes its application under the particular unique facts and circumstances of this case, which require application of a different rule fitting the specific circumstances and equities: However, [w]here, as here, a business continues after suffering from an act of negligence the business is entitled to recover the lost profits attributable to defendant s negligent act, but cannot recover both lost profits, and the market value of the business. (Op. 11, quoting Sostchin and indirectly quoting Aetna Life & Casualty Co. v. Little, 384 So. 2d 213 (Fla. 4th DCA 1980) (e.s.).) The Third District s decision does not expressly and directly conflict with the other districts decisions cited by Waterways. In fact, it does not cite a decision of any other district that conflicts with its opinion, and the Third District decisions cited by Waterways can be harmonized. There is no conflict jurisdiction. 4

10 ARGUMENT I. The Petition should be denied because the decision does not conflict with Polyglycoat or Montage Group. Conflict jurisdiction can only exist if the district court s decision expressly and directly conflicts with a decision of another district court of appeal... on the same question of law. Art. V, 3(b)(3), Fla. Const. Waterways alleges a conflict with Montage Group, Ltd. v. Athle-Tech Computer Systems, Inc., 889 So. 2d 180 (Fla. 2d DCA 2004) and Polyglycoat Corp. v. Hirsch Distribs., Inc, 442 So. 2d 958 (Fla. 4th DCA 1983), simply because they state the general rule that the proper total measure of damages is market value on the date of loss if the business is completely destroyed. (Pet. 4-5.) However, the Opinion did not cite or discuss those cases. It only cited (and distinguished) some earlier decisions of the Third District itself, which applied that same general rule. (Op ) Waterways also improperly tries to create conflict by citing those decisions from within the Third District. (Pet. 5.) The Third District was petitioned for en banc review and declined. This Court has held that the district courts are free... to develop their own concept of decisional uniformity. Chase Fed. S&L Ass n v. Schreiber, 1984 Fla. LEXIS 3193 *8 (Fla. July 26, 1984) (citations and internal quotes omitted). The Third District reconciled its decision with its own prior cases based on the factual distinctions. (Op. 9.) Similar factual distinctions allow the Katz Opinion to be harmonized with 5

11 the other districts decisions cited by Waterways. The Florida Constitution does not allow for an exercise of jurisdiction in these circumstances. This Court has explained that whether the holdings of [two decisions] are irreconcilable... is one of the tests for conflict jurisdiction. See Crossley v. State, 596 So. 2d 447, 449 (Fla. 1992) (concluding that because the court below reached the opposite result on controlling facts which, if not virtually identical, more strongly dictated the result reached by the alleged conflict case, a conflict of decisions existed that warranted accepting jurisdiction). Aravena v. Miami-Dade County, 928 So. 2d 1163, (Fla. 2006). Polyglycoat is easily harmonized because it only states general principles of law some of the same general principles stated in the Third District Opinion at 11. The Polyglycoat opinion does not relate any facts except that it was a contract action and there was a dispute about damages; but at page 960 it cites to Aetna Life & Casualty Co. v. Little, 384 So. 2d 213 (Fla. 4th DCA 1980), which is the original source of statement that the present Third District decision quotes to distinguish its facts from cases where a business is completely destroyed by the act of negligence: Where, as here, a business continues after suffering from an act of negligence the business is entitled to recover the lost profits attributable to defendant s negligent act, but cannot recover both lost profits, and the market value of the business. Aetna Life & Casualty Co. v. Little, 384 So. 2d 213 (Fla. 4th DCA 1980). [e.s.] Sostchin v. Doll Enters., Inc., 847 So. 2d 1123, 1128 n.6 (Fla. 3d DCA 2003) (e.s.; 6

12 cited and quoted at Op. 11). Thus, Polyglycoat and the Katz Deli decision are both founded upon the Fourth District s decision in Aetna Life & Casualty Co. Both decisions apply rules from Aetna Life. There is no conflict between the Katz Deli decision and Polyglycoat. Katz Deli is also easily harmonized with Montage Group. There, Athle- Tech contended that Montage s failure to deliver the completed source code... had destroyed its business. Athle-Tech sought to recover the damages it had sustained as a result of the destruction of its business, along with three other forms of damages for the breach. Montage Group, 889 So. 2d at 188. The Fourth District explained: Because Athle-Tech s theory of damages at trial was that the nonreceipt of the Omega source code had destroyed its business, the proper measure of its damages was the value of its business on the date the business was destroyed. Id. at 193. The Third District acknowledged that general rule but, by contrast, the Third District was careful to distinguish the fact that Katz s business remained in operation although crippled and dwindling after the Landlord s acts of negligence, and Katz remained intact as a company and tried to reopen elsewhere after vacating the premises. There was no clear specific date of loss on which it could be said the business was destroyed. It was initially just crippled and eventually faded away over a period of considerably more than a year. Thus, the 7

13 general rule cannot apply because it requires a definite date of loss. These unique facts and equities in Katz Deli distinguish it from Montage Group and make the general rule inapplicable. These cases are easily reconciled. There is no conflict. II. The Petition should be denied because the decision does not conflict with Zinn. Waterways is mistaken in asserting a conflict with Zinn v. GJPS Lukas, Inc., 695 So. 2d 499 (Fla. 5th DCA 1997), which it alleges to show that there is no dwindling business exception to the general rule; i.e., continuing businesses get lost profits; businesses which are out of business get damages for loss of business value. (Pet. 7.) In reality, Zinn simply held that a brine shrimp and fish company was entitled to recover lost profits where its business was greatly diminished but not destroyed by a neighbor s negligent pesticide spraying. 2 Id. at The Zinn court noted: Where a business continues after suffering from an act of negligence, the business is entitled to recover the lost profits attributable to the defendant s negligent act. Id. at 500 (citations omitted). That is the same principle upon which Katz Deli is based: where, as here, a business continues after suffering from an act of negligence the business is entitled to recover the lost 2 Zinn is also distinguishable in that, in contrast to Katz Deli, the Fifth District s decision is not a constructive eviction case and thus was not within the ambit of the flexible range of remedies available in constructive eviction cases, which involve both breach of contract and tort. This Court has recognized lost profits as a wrongful-eviction remedy that comport[s] with justice and reason since at least See Young v. Cobbs, 83 So. 2d 417, 419 (Fla. 1955). 8

14 profits.... (Op. 11.) As such, Waterways long-term continuing breach of the obligation to replace the roof allowed Katz to stay in business for over a year, but crippled the operations and slowly depreciated the market value. There is a unity and harmony of principles in these cases, not a conflict. III. The Petition should be denied because the decision does not conflict with Pahokee Housing Authority or Polyglycoat. Waterways erroneously claims that the Third District decision somehow conflicts with a statement in Pahokee Housing Authority, Inc. v. South Florida Sanitation Co., 478 So. 2d 1107, 1108 (Fla. 4th DCA 1985) (a business competition and infringement case) that a lost profit award must be commensurate with what is fair and just and limited to the actual damages sustained. But Katz Deli is based on the same principle, as enunciated at Op The Petitioner also alleges a conflict with a statement in Polyglycoat, 442 So. 2d at 959: Loss of profits may be recovered where the plaintiff makes it reasonably certain by competent proof what the amount of his actual loss was. ) In reality, Katz Deli notes the same principle: Lost profits must be established with a reasonable degree of certainty and must be a natural consequence of the wrong. (Op. 17 (citation and internal quotes omitted).) There is no conflict. Moreover, Waterways is mistaken in arguing that the mere existence of a leasehold interest following the constructive eviction does not establish that profits 9

15 would have been realized the entire time. (Pet. 8-9.) Katz did not rely on the mere existence of the leasehold, but rather on the profits that the evidence proved it would have received in that location, but for the wrongful eviction. Cf. Young v. Cobbs, 83 So. 2d 417, 419 (Fla. 1955) ( the continuance of business in that location may be of substantial value to [the merchant].... To hold that no recovery can be had for the profits which he can prove he would have made at that location during the remainder of the unexpired term of his lease, would leave him entirely without remedy, though he was entirely without fault ). When our jurisdiction is invoked pursuant to this [conflict] provision.... [,] we are not permitted the judicial luxury of upsetting a decision of a Court of Appeal merely because we might personally disagree with the... justice of the case as announced by the Court below. Nielsen v. Sarasota, 117 So. 2d 731, 734 (Fla. 1960). Under the unique facts and equities of this case, this Court should decline to exercise jurisdiction even if it were available. CONCLUSION The Third District s decision does not expressly and directly conflict with the decisions of other district courts of appeal. Thus, no conflict jurisdiction exists. Further, the equities of the decision should stand. The Petition should be denied. WHEREFORE, Respondent Katz respectfully requests that the Court decline jurisdiction, deny the Petition, and allow the Third District s decision to stand. 10

16 Respectfully submitted, /s/ Scott Alan Orth Scott Alan Orth, Esq. Florida Bar No LAW OFFICES OF SCOTT ALAN ORTH, P.A Sheridan Street Hollywood, FL Telephone: (305) Facsimile: (305) (primary) (secondary) Counsel for Respondent Katz 11

17 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was electronically filed via Florida Courts E-Filing Portal pursuant to AOSC13-7 and served via electronic mail pursuant to Fla. R. Civ. P. Rule on the 11th day of March, 2014, upon: Lance W. Shinder, Esq. Arielle L. Berg, Esq. LANCE W. SHINDER, P.A. 398 Camino Gardens Blvd., Suite 109 Boca Raton, FL lance@shinderlaw.com arielle@shinderlaw.com robin@shinderlaw.com Counsel for Petitioner Waterways Bambi G. Blum, Esq. BAMBI G. BLUM, P.A. 46 SW First Street, Fourth Floor Miami, FL bblumlaw@bellsouth.net cassandre.bblumlaw@gmail.com Appellate Counsel for Petitioner Waterways /s/ Scott Alan Orth Scott Alan Orth, Esq. CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that this Brief complies with the font requirements (14-point Times New Roman) of Fla. R. App. P. Rule 9.210(a)(2). /s/ Scott Alan Orth Scott Alan Orth, Esq. 12