In business litigation, Florida courts typically apply a flexibility theory of damages in fraud case. Gregg v. U.S. Industries, Inc., 887 F.2d 1462 (11th Cir. 1989). “The ‘flexibility’ theory of damages allows a plaintiff to choose either benefit-of-the-bargain or out-of-pocket damages in fraud cases[.]” Morgan Stanley & Co. Inc. v. Coleman (Parent) Holdings Inc., 955 So. 2d 1124 (Fla. 4th DCA 2007). This theory “assure[s] that an injured party will obtain full compensation for the effect of the fraud[.]” Trafalgar Cap. Specialized Inv. Fund, FIS v. Atl. Energy Sols., Inc., 2010 WL 11505575 (S.D. Fla. Nov. 30, 2010). Peter Mavrick is a Miami business litigation attorney, and represents clients in business litigation 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.
If the defrauded party seeks recovery “of only the amount he actually lost, his damages will be measured under [the out-of-pocket-rule].” DuPuis v. 79th Street Hotel, Inc., 231 So. 2d 532 (Fla. 3d DCA 1970). Thus, “[t]he out-of-pocket-rule allows for recovery of amounts that the plaintiff actually lost.” Laney v. Am. Equity Inv. Life Ins. Co., 243 F. Supp. 2d 1347 (M.D. Fla. 2003). The out-of-pocket rule awards as damages the difference between the purchase price and the real or actual value of the property. Kind v. Gittman, 889 So. 2d 87 (Fla. 4th DCA 2004). “[W]here the circumstances disclosed by the proof are so vague as to cast virtually no light upon the value of the property had it conformed to the representations, the court will award damages equal only to the loss sustained.” DuPuis v. 79th Street Hotel, Inc., 231 So. 2d 532 (Fla. 3d DCA 1970).
On the other hand, the benefit-of-the-bargain-rule “is utilized when the out-of-pocket rule does not fully compensate the plaintiff.” Laney v. Am. Equity Inv. Life Ins. Co., 243 F. Supp. 2d 1347 (M.D. Fla. 2003). “Under the benefit-of-bargain-rule, the plaintiff is entitled to the loss of its bargain, similar to a recovery on a warranty.” Laney v. Am. Equity Inv. Life Ins. Co., 243 F. Supp. 2d 1347 (M.D. Fla. 2003). “[I]f the fraudulent misrepresentation also amounts to a warranty, recovery may be had for the loss of the bargain, because a fraud accompanied by a broken promise should cost the wrongdoer as much as the latter alone[.]” DuPuis v. 79th Street Hotel, Inc., 231 So. 2d 532 (Fla. 3d DCA 1970). The benefit-of-the-bargain rule awards as damages the difference between the value of the property as represented and the actual value of the property. In re Biddiscombe Intern., L.L.C., 392 B.R. 909 (Bank. M.D. Fla. 2008).
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