Page 77 - Economic Damages Calculation

so gained comfort with the use of data from "similar" operations through the plaintiffs’ experience in
similar businesses.

River Bridge Corp., et al. v. Am. Somax Ventures

In this case, American Somax Ventures (ASV) alleged that River Bridge Corporation (RBC) breached
agreements related to the development of a residential area covering five pods (parcels) to include ap-
proximately 500 dwellings. fn 50 In particular, ASV alleged RBC had breached ASV’s right of first re-
fusal regarding the sale of parcels to third parties. Under the agreements, RBC also agreed to construct
amenities (such as lighting, wiring for cable television and security, water and sewer lines, a pool, and
tennis facilities) that ASV alleged RBC failed to adequately build as promised.

ASV’s expert, a consultant to real estate developers and builders, testified that the amenities built by
RBC were "woefully inadequate" and that RBC’s sales staff were "‘untrained, untalented, unsuper-
vised,’ and unable to market and sell the new homes." fn 51 The expert opined that the 43 homes planned
for the first pod, parcel 1A, should have been sold in 18 months, but had not been as a result of RBC’s
failure to construct proper amenities and provide the marketing called for under the contract with ASV.

To determine lost profits related to the breach of the right of first refusal on subsequent pods, ASV’s ex-
pert used the actual sales made by the third-party builders who purchased the subsequent pods. The ex-
pert "took the number of actual closings and calculated the estimated profit at the 7.32% profit rate de-
rived from the estimation for Parcel 1A." fn 52 He admitted on cross-examination that he did not know
whether the other builders ever recognized a profit in the homes sold and did not know the extent of the
other builders’ costs.

At trial, the jury returned a verdict in favor of ASV for approximately $8.5 million; this included $1.25
million for damages as a result of RBC’s failure to build the amenities and market the property, with the
remaining amount for lost profits due to RBC’s breach of the right of first refusal on subsequent pods.

RBC argued on appeal that the judgment should be reversed because "the expert was not qualified, an
incorrect measure of damages was used, and the damages were too speculative." fn 53 The Court of Ap-
peal of Florida overruled RBC’s objections to the qualifications of the expert and affirmed the verdict
for lost profits related to the inadequate amenities associated with sales for the first pod. However, the
Court of Appeal found that the testimony concerning the lost profits derived from the breach of the right
of first refusal were too speculative and reversed that part of the verdict.

ASV’s expert used the yardstick method to calculate the lost profits due to the breach of the right of first
refusal related to the subsequent pods, arguing that the contractors who built out the subsequent parcels
were an adequate yardstick. The Court of Appeal, however, concluded as follows:

fn 50 River Bridge Corp. v. Am. Somax Ventures, 18 So. 3d 648 (Fla. 4th DCA. 2009).

fn 51 Id. at 650.

fn 52 Id.

fn 53 Id.

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