Under Florida law accords litigants with two main avenues for recovery of damages in cases of deception or fraud. One option is via the Florida Deceptive and Unfair Trade Practices Act (commonly referred to as FDUPTA), which allows recovery of actual damages plus the legal expense associated with the successful prosecution of the claim. The second option is a common-law claim for fraud. As in any business litigation, there are important strategic considerations whether either or both claims should be asserted. There are advantages and disadvantages to each claim, and they are not mutually exclusive. Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.
Claims under FDUPTA have certain advantages and risks when compared to claims of fraud. Stewart Agency, Inc. v. Arrigo Enter., Inc., 266 So.3d 207 (Fla. 4th DCA 2019), explained the elements of a FDUPTA claim: “To bring a FDUPTA claim for damages, a plaintiff must establish three elements: 1) a deceptive act or unfair practice; 2) causation; and 3) actual damages.” In addition, the prevailing party in a FDUPTA can recover its attorneys’ fees. On big potential advantage to a FDUPTA claim is that the prevailing plaintiff can recover its attorneys’ fees from the defendant. At the same time, this also poses a risk to the plaintiff, because if the defendant wins the case, the plaintiff can be liable for the defendant’s attorneys’ fees. This is an important risk to consider. Concerning damages, FDUPTA states in pertinent part: “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 ….” This is because “[t]he act is intended to protect consumers from unfair or deceptive acts or practices which diminish the value or worth of the goods or services purchased by the consumer.” Urling v. Helms Exterminators, Inc., 468 So.2d 451 (Fla. 1st DCA 1985). Because FDUPTA provides for recovery of only “actual damages,” recovery of other damages, such as consequential damages, is not authorized. As explained in Fort Lauderdale Lincoln Mercury, Inc. v. Corgnati, 715 So.2d 311 (Fla. 4th DCA 1998), FDUPTA, at Florida Statutes Section 501.211, “entitles a consumer to recover damages attributable to the diminished value of the goods or services received, but does not authorize recovery of consequential damages to other property attributable to the consumer’s use of such goods or services.” Florida’s Fourth District Court of Appeal in Maroone Chevrolet, LLC v. Alvarado, 344 So.3d 459 (Fla. 4th DCA 2022), reversed a jury verdict in a FDUPTA claim that went far beyond “actual damages.” Alvarado explained in pertinent part: “Alvarado argues that the loss of his $12,000.00 down payment, as well as various loan, warranty, and other payments, were part of his actual damages. However, down payments and loan payments typically are not included in actual damages because they are considered consequential damages…[Plaintiff Alvarado’s] argument blurred the lines between properly awardable actual damages and the consequential damages he requested. In fact, the trial testimony reveals a variety of monetary figures provided to the jury, none of which proved the diminished value of the Second Truck…There simply was no competent, substantial evidence to support the proper measure of damages, and the jury’s ultimate damage awards pertaining to Count 2 must be reversed.”
Florida law treats fraud claims much differently regarding recovery of attorneys’ fees and the approach to recoverable damages. Concerning recover of attorneys’ fees, fraud claims are governed by what is commonly referred to as the “American rule,” meaning that each party in litigation bear its respective attorneys’ fees. Fraud claims also are governed by a different approach to damages. Florida has developed a “flexibility” theory of damages in cases of fraudulent misrepresentation to assure that an injured party will obtain full compensation for the effect of fraud. An injured party may recover either the out-of-pocket loss or the benefit off the bargain loss. Fourth District Court of Appeal precedent in Martin v. Brown, 566 So.2d 890 (Fla. 4th DCA 1990), explained both theories of damages: “The first standard is the ‘benefit of the bargain’ rule which awards as damages the difference between the actual value of the property and its value had the alleged facts regarding it been true. The second standard is the “out-of-pocket” rule which awards as damages the difference between the purchase price and the real or actual value of the property.” Each measure of damages requires that the jury have evidence of the actual value of the property in question. For example, in Morgan Stanley & Co. v. Coleman, 955 So.2d 1124 (Fla. 4th DCA 2007), the expert did not testify to the actual value of the stock in question, which was a fatal flaw in the fraud action. Without proof of the actual value of the stock, the plaintiff had not proved its damages.
Peter Mavrick is a Miami business litigation lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.