IN THE SUPREME COURT THE STATE OF FLORIDA CASE NO. SC10-1922 3DCA CASE NO. 3D09-1475 DOCTOR DIABETIC SUPPLY, INC., Appellant / Petitioner, v. POAP CORP. d/b/a EXCHANGE PLACE, Appellee / Respondent. PETITIONER S BRIEF ON JURISDICTION ON DISCRETIONARY REVIEW FROM A DECISION OF THE THIRD DISTRICT COURT OF APPEAL Keith T. Grumer, Esq. Florida Bar No. 504416 Grumer & Macaluso, P.A. Attorneys for Petitioners One East Broward Boulevard Suite 1501 Ft. Lauderdale, Florida 33301 Telephone: (954) 713-2700 Facsimile: (954) 713-2713
TABLE OF CONTENTS Page No. TABLE OF CITATIONS... ii STATEMENT OF THE CASE AND FACTS... 3 SUMMARY OF ARGUMENT... 3 ARGUMENT... 4 CONCLUSION... 7 CERTIFICATE OF SERVICE... 8 CERTIFICATE OF COMPLIANCE... 9 -i-
TABLE OF CITATIONS Cases Beefy Trail, Inc. v. Beefy King International, Inc., 267 So.2d 853 (Fla. 4th DCA 1972) reh g den...... 3, 4, 5 Paul Gottlieb & Co., Inc. v. ALPS South Corporation, 985 So. 2d 1 (Fla. 2nd DCA 2007) reh g den... 3, 5 Hardwick Properties, Inc. v. Newbern, 711 So. 2d 35 (Fla. 1 st DCA 1998) reh g den... 3, 5, 6 Constitution Art. V, 3(b)(3) Fla. Const.... 4, 7 Other Authorities Fla. R. App. P. 9.030(a)(2)(A)(iv)... 4, 7 -ii-
STATEMENT OF THE CASE AND FACTS Petitioner DR. DIABETIC distributes diabetic testing supplies and related products to consumers with diabetes. POAP sold business leads generated through internal marketing efforts. The parties entered into a written Agreement in June 2007, and agreed that POAP would deliver valid business leads for new clients to DR. DIABETIC, and subsequently agreed on an average target number of leads to be delivered. Paragraph 7 of the Agreement sets forth a Contractual Limitations on liability (the "Contractual Limitation") and provides: Limitation of Liability. With the exception of any liability arising out of the breach of any warranties contained in Section 6 herein, either party's aggregate liability arising out of or relating to this Agreement, including without limitation, on account of performance or nonperformance of obligations hereunder, regardless of the form of the causes of action, whether in contract, tort (including, without limitation, negligence), statute or otherwise, shall in no event exceed the amounts paid to Exchange Place under this Agreement. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER PARTY SHALL, UNDER ANY CIRCUMSTANCES, BE LIABLE TO THE OTHER PARTY FOR ANY CLAIM BASED UPON ANY THIRD PARTY CLAIM, OR FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES OF ANY NATURE WHATSOEVER, OR FOR ANY DAMAGES ARISING OUT OF OR IN CONNECTION WITH ANY MALFUNCTIONS, DELAYS, LOSS OF DATA, LOSS OF PROFIT, INTERRUPTION OF SERVICE OR LOSS OF BUSINESS OR ANTICIPATORY PROFITS, EVEN IF THE -3-
OTHER PARTY WAS APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING. In anticipation of performance, DR DIABETIC increased hiring and staffing and undertook training of employees in order to service the anticipated POAP leads, at great expense. POAP commenced delivery of leads as anticipated, but the volume of leads dropped sharply in February 2008, and despite their repeated reassurances that the leads would resume, the leads ceased altogether in April 2008. POAP sued for breach for sums due on the account, and DR DIABETIC asserted a setoff defense and counterclaim for breach, seeking recovery of reliance damages sustained by DR. DIABETIC consisting of the expenses incurred to hire, train and carry the substantial work force required to service the POAP Leads. The trial court granted POAP s motion for summary judgment, and denied the setoff to DR DIABETIC, interpreting the Contractual Limitation to preclude all damages, even the reliance damages sought. The Third District Court of Appeal affirmed, concurring with the trial court that the damages sought by DR DIABETIC amounted to consequential damages and were barred under the Contractual Limitation. (A. 1) DR DIABETIC seeks discretionary review of the Decision filed June 30, 2010. -4-
SUMMARY OF THE ARGUMENT The Decision holds that Florida law equates reliance damages to consequential damages, and barred recovery to DR DIABETIC under the Contractual Limitation. (A:4) This Court has jurisdiction because, the Decision expressly and directly conflicts with Beefy Trail, Inc. v. Beefy King International, Inc., 267 So.2d 853 (Fla. 4th DCA 1972) reh g den., that reliance damages and consequential damages are distinct. This Court also has jurisdiction because the Decision conflicts with Paul Gottlieb & Co., Inc. v. ALPS South Corporation, 985 So. 2d 1 (Fla. 2nd DCA 2007) reh g den, stating that contractual limitation against consequential damages permits recovery of direct damages. Conflict exists with the very case cited by the Third District, Hardwick Properties, Inc. v. Newbern, 711 So. 2d 35 (Fla. 1 st DCA 1998) reh g den., which makes the distinction between disallowed consequential damages and permitted general damages under a similar contractual limitation. -5-
ARGUMENT THE DECISION CREATES A REAL AND DIRECT CONFLICT WITH OTHER DECISIONS THAT RECOGNIZE THAT RELIANCE AND OTHER GENERAL DAMAGES ARE DISTINCT FROM CONSEQUENTIAL DAMAGES AND ARE NOT BARRED BY CONTRACTUAL LIMITATION. This Court has discretionary jurisdiction pursuant to Art. V, 3(b)(3), Fla. Const. and Fla. R. App. P. 9.030(a)(2)(A)(iv) because the Decision conflicts with decisions of the Fourth District, Second District and First District on the same question of law. The Decision departs from and conflicts with established law that distinguishes between consequential damages and the reliance damages sought by Dr. Diabetic. The Decision incorrectly holds that the Contractual Limitation against consequential damages bars recovery of reliance damages. (A. 1) Other decisions distinguish between consequential damages and reliance damages, which are not the same. The Contractual Limitation barring consequential damages does not preclude recovery of reliance damages herein. No Florida court has held that reliance damages are the equivalent of consequential damages, i.e. lost profits, and the two remedies are distinguishable. In Beefy Trail, Inc. v. Beefy King International, Inc., 267 So.2d 853 (Fla. 4th DCA 1972) reh g den., the Fourth District explained the difference between reliance -6-
damages and lost profits, i.e. consequential damages, as distinct and alternative methods of recovery. In Beefy Trail, the court stated that a party seeking a remedy for a contractual breach could recover either the gains he would have made had the defendant performed in full as the contract required subtracting therefrom the costs of operations necessary to realize those gains, or he may omit an attempt to show lost profits and instead show actual losses in the form of expenditures made before nonperformance by the defendant as were reasonably foreseen. Id. at 856. The latter damages consisted of expenditures make in preparation for performance, and represent the party s reliance interest. Id. The two forms of damages are distinct and available in the alternative. Id. Unlike lost profits, which are recoverable if not speculative, reliance damages are not speculative, and there is no reason to deny their recover if they were foreseeable at the time the contract was entered into. Id. In Paul Gottlieb & Co., Inc. v. ALPS South Corporation, 985 So. 2d 1 (Fla. 2nd DCA 2007) reh g den., the Second District recognized that a contractual limitation against indirect and consequential damages, i.e. lost profits, did not bar general, or direct, damages. The existence of a limitation against consequential damages did not preclude a party injured in breach from recovering direct damages. Id. at 8. In that case, the court equated consequential damages to lost profits, and not reliance damages. Finally, in its Decision affirming the trial court, the Third District below relied -7-
upon Hardwick Properties, Inc. v. Newbern, 711 So. 2d 35 (Fla. 1 st DCA 1998) reh g den. Ironically, that court also distinguished between consequential damages, or lost profits, and other forms of general damages, in construing a contractual limitation provision, and that decision supports DR DIABETIC s application for discretionary review herein. In Hardwick, the court interpreted a contractual limitation against consequential or special damages, and held that this did not preclude recovery of general damages. Id. at 39. General damages were described as those damages as may fairly and reasonably be considered as arising in the usual course of events from the breach of contract itself. Id. at 40. (citation omitted) Special damages were described as not likely to occur in the usual course of events, but may reasonably be supported to have been in contemplation of the parties at the time they made the contract. Id. These special damages are peculiar to the non-breaching party and would not be expected to occur regularly to others in similar circumstances. Id. (citation omitted) Finally, consequential damages, are those that do not arise within the scope of the immediate buyer-seller transaction, but rather stem from losses incurred by the non-breaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting. Id. (citation omitted) The Hardwick court described lost profits as the -8-
most common form of consequential damages. Id. CONCLUSION DR DIABETIC respectfully request the Court exercise its discretionary jurisdiction pursuant to Art. V, 3(b)(3), Fla. Const. and Fla. R. App. P. 9.030(a)(2)(A)(iv) and grant a review of this matter on the merits. -9-
CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was furnished by U.S. Mail this 26 th day of October 2010 to: JOHN H. PELZER, ESQ. and ROBIN F. HAZEL, ESQ., Ruden, McClosky, et al, 200 East Broward Blvd., Suite 1500, P.O. Box 1900, Fort Lauderdale, FL 33302. GRUMER & MACALUSO, P.A. Attorneys for Petitioner One East Broward Boulevard Suite 1501 Ft. Lauderdale, Florida 33301 (954) 713-2700 (Tel.) (954) 713-2713 (Fax) By: KEITH T. GRUMER -10-
CERTIFICATE OF FONT COMPLIANCE Counsel for Petitioners hereby certifies that this brief was typed in Times New Roman 14- point font in compliance with Fla. R. App. P. 9.210(a)(2). Keith T. Grumer, Esq. -11-