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The Florida Bar Journal
May, 2006 Volume 80, No.5
Understanding and Applying Florida’s Flexibility Theory of Damages

by Jonathan S. Coleman

Page 10

Florida courts have led the nation with the so-called “flexibility theory of damages,” which means that plaintiffs in contract and tort may seek reimbursement of out-of-pocket expenses, or reasonable future lost profits, but not both. The “flexibility theory” is more accurately a doctrine limiting the availability of damages. While the concept has been consistently and frequently applied around the country, the term itself is surprisingly scarce. Florida first adopted the principle underlying the “flexibility theory” in 1970, and applied the doctrine in several 2005 appellate decisions. Yet, only three reported opinions, beginning in 1970 and ending in 2004, have referred to it by name.1

The author recommends that Florida practitioners regularly invoke the term in their motion practice and appellate briefing to clarify the doctrine’s use and avoid confusion that can lead to trial court reversals and unnecessary appeals. Proper application is important because plaintiffs who seek inappropriate damages risk derailment of their cases through summary judgment, new trial orders, dismissals, or appellate reversals. Likewise, defendants who fail to recognize (and challenge) inappropriate trial rulings flirt with malpractice and otherwise do their clients a disservice through the risk of inappropriate verdicts or waiver of appellate issues.

Florida First Adopted the Flexibility Theory
Florida, beginning in 1970, and Maryland, a year later, are the only two states employing the term “flexibility theory,” using it 11 times.2 Even if the label is not widespread, the doctrine is ubiquitous. State courts in Oregon and Texas, and federal courts in Kansas, New York, and elsewhere have all applied the flexibility theory’s principles.3

The first Florida decision to use the term “flexibility theory” was DuPuis v. 79th St. Hotel, Inc., 231 So. 2d 532 (Fla. 3d DCA 1970). In that tort case, the trial court approved a jury instruction which allowed the jury to consider awarding both “benefit of the bargain” and “out-of-pocket” damages. The appellate court reversed this liberal interpretation of damage availability, and instead adopted the flexibility theory as outlined in 37 Am. Jur. 2d, Fraud and Deceit §352.4 DuPuis is also noteworthy for foreshadowing a related damage concept — recovery of lost profits carries a higher burden of proof than does restitution of out-of-pocket expenses; lost profits require “sufficient certainty.”5

Florida courts have routinely applied the bedrock principles of the flexibility theory as adopted in DuPuis up through the present. An early but frequently cited application of the flexibility theory (minus the term) is Beefy Trail, Inc. v. Beefy King International, Inc., 267 So. 2d 852 (Fla. 4th DCA 1972), which confirmed that future lost profits and recovery of out-of-pocket reliance expenditures present a clear either/or scenario:

If a party seeks the remedy of damages two alternative methods for determining recovery are available: (1) he may prove the gains he would have made had the defendant performed in full as the contract required subtracting therefrom the costs of the operations necessary to realize those gains, i.e., the injured party may seek lost profits and in such case the interest he seeks to protect is his “expectation interest”; (2) he may omit an attempt to show lost profits and prove instead his actual expenditures made before the repudiation or nonperformance by the defendant insofar as those expenditures were reasonably to have been foreseen, i.e., expenditures made in preparation for performance or in part performance and in such case the interest the plaintiff seeks to protect is his “reliance interest.”6

Beefy Trail is consistent with DuPuis; reliance damages are the only alternative when lost profits “may be too speculative to form a part of any damage award.”7

Florida’s Third District (which decided DuPuis) again applied the flexibility theory (minus the term) in Sundie v. Livesay, 166 So. 2d 152 (Fla. 3d DCA 1974). Sundie confirmed that while a plaintiff may seek restitution of expenses paid or future lost profits, those methods are alternative, inconsistent, and mutually exclusive theories of recovery.8 The same result occurred more than a decade later in Resorts International, Inc. v. Carter Air Center, Inc., 503 So. 2d 1293, 1296 (Fla. 3d DCA 1987), where allowing damages “for both its lost profits and its expenditures made” was reversible error; “[T]hese measures are alternate remedies [and] the injured party must make an election in regard to which method he seeks to recover, and pursue that method only.”9

The Third District applied the flexibility theory again in 1991 in Pathway Financial v. Miami Int’l Realty Co., 588 So. 2d 1000 (Fla. 3d DCA 1991), which set aside a verdict because of the trial court’s error in awarding both the plaintiff’s out-of-pocket expenses and “prospective” profits. Such double recovery is disallowed: “The plaintiffs are not entitled to both reliance and benefit of the bargain damages; these remedies are mutually exclusive and cannot both be the natural result of the breach.”10

A lengthy gap — no less than 23 years — elapsed between DuPuis’ initial use of the term “flexibility theory” in 1970, and its 1993 appearance in Nordyne, Inc. v. Fla. Mobile Home Supply, Inc., 625 So. 2d 1283, 1286-87 (Fla. 1st DCA 1993). Nordyne was a business tort case alleging, among other things, fraud and tortious interference. Nordyne, following a jury verdict for compensatory and punitive damages, argued on appeal that future profits could only be awarded under the “benefit of the bargain” rule, which was limited to contract claims. The appellate court disagreed; under the flexibility theory, a court can use either an out-of-pocket or a benefit of the bargain analysis, depending upon which would more fully compensate the injured party.11 The jury, therefore, properly considered awarding future lost profits.12

Nordyne is noteworthy not only because it is only the second use of the term, but also because it confirms that the flexibility theory applies to tort as well as contract cases.13

Eleven years passed between Nordyne and the 2004 application of the flexibility theory in Totale, Inc. v. Smith, 877 So. 2d 813 (Fla. 4th DCA 2004). Totale confirmed DuPuis as well; the preferred method of awarding damages is restoration of a plaintiff’s out-of-pocket disbursements. If proof of future lost profit damages is unreasonably vague or speculative, they cannot be recovered.14

Florida courts following Totale continue to apply the flexibility theory, but for some reason courts continue to avoid the label. One recent example is State of Florida, Department of Corrections v. Brooks, 891 So. 2d 1 (Fla. 1st DCA 2005), which confirmed that plaintiffs cannot recover both reliance and expectation damages; they are “alternate, and mutually exclusive, remedies.”15 Another recent example is Meadows v. English, McCaughan & O’Bryan P.A., 909 So. 2d 926 (Fla. 4th DCA 2005), citing Totale with approval — but failing again to use the actual term “flexibility theory.”

Maryland Adopted the Flexibility Theory in 1971 — Maryland state courts began to use the term “flexibility theory” in 1971, one year after DuPuis. In Hinkle v. Rockville Motor Co., Inc., 278 A.2d 42 (Md. App. 1971), an automobile purchaser sued a dealer for fraud when a car sold as new turned out to have been used and previously damaged in an accident. The trial court directed a verdict for the dealer but the appellate court reversed, resolving a “confusion in regard to the measure of damages.”16

The Hinkle court’s decision, which adopted the flexibility theory in Maryland, cited to a variety of sources: a 1938 Oregon case17; Prosser on Torts; Am. Jur. 2d; and a 1961 Virginia law review note,18 thereby demonstrating the wide-spread acceptance of the principle. Four rules emerged from Hinkle: 1) If the plaintiff is content with recovery of the amount lost, that is the measure of his damages; 2) a fraud accompanied by a broken promise can lead to benefit-of-the- bargain damages; 3) when proof of future loss is vague, damages will be limited to the loss sustained; and 4) only if benefit-of-the-bargain losses are proven with reasonable certainty can they be recovered.19

Maryland courts rapidly adopted Hinkle’s initial 1971 adoption of the term “flexibility theory,” applying it again in 1972.20 Maryland has invoked the term at approximately four-year intervals: in 1976,21 1980,22 1985,23 198724 and twice in 2004.25 Why Florida has not followed suit is a mystery.

The Flexibility Theory Appears in Other States — Florida and Maryland do not stand alone. The flexibility theory is frequently called into use in other jurisdictions, even though the term itself is not used. One recent example from Oregon is Oregon Steel Mills, Inc. v. Coopers & Lybrand, LLP, 83 P.3d 322 (Or. 2004), where the issue was the accounting firm’s liability when it unnecessarily delayed the sale of a business, but intervening market forces would have changed the price of the plaintiff’s stock anyway. Summary judgment for the defendant was reinstated on the rationale that the loss was due to market factors; “[a]s a matter of law, the risk of a decline in plaintiff’s stock price in June 1996 was not a reasonably foreseeable consequence of defendant’s negligent acts in 1994 and early 1995.”26 Had the sale been timely consummated, damages would have been mitigated or avoided altogether, but because the market’s decline was not sufficiently foreseeable to the defendant, liability was avoided.27

Texas case law is similar. In Sunshine Mining and Refining Co. v. Ernst & Young, LLP, 114 S.W.3d 48 (Tx. App. 2003), an appellate court considered whether an accountant’s resignation resulted in a chain of events which caused cancellation of a stock offering, then forced the company’s bankruptcy. Summary judgment on both causation and damages was affirmed on appeal. The plaintiff argued that the offering would have been successful but for the accountant’s resignation, but the court found insufficient evidence that the offering would have been successful had it occurred.28 The success or failure of the company was “entirely dependent upon the purchasing decisions of third parties” and “proof of causation cannot turn upon speculation or conjecture.”29

Federal Courts Also Apply the Flexibility Theory — Seven federal courts have used the term “flexibility theory,” and four of them considered disputes arising under Florida or Maryland law.30 Of the remaining three federal opinions,31 all diversity cases applying Florida law, only two are published.

Coghlan involved a boat sold by a Florida company as fiberglass; it was actually fiberglass-coated wood. The Fifth Circuit, acknowledging that benefit of the bargain damages may be an alternative to out-of-pocket damages, noted that “Texas and Florida both follow the ‘flexibility theory’ in fraud actions, which permits a trial court to instruct the jury under either the out-of-pocket rule or the benefit of the bargain rule, whichever will more fully compensate the defrauded party.”32 The rule is the same for contract cases.33 The Kansas district court applied Florida law in Aerotech,34 as did the Southern District of New York in Belmac.35

Other federal jurisdictions have applied the reasoning of the flexibility theory without the title. For instance, a federal court sitting in New York but not applying Florida law used the flexibility rationale in Three Crown Ltd. Partnership v. Salomon Bros., Inc., 906 F. Supp. 876 (S.D. N.Y. 1996). There, the issue was whether a plaintiff could recover lost profits on investments it never made on securities it never purchased or sold. The answer was “no” and the court affirmed a partial summary judgment for the defendant. The plaintiff’s assertions that it was prevented from employing its trading strategy, or that it could not raise capital to do so, were “based wholly on conclusory and self-serving statements of its principals and without supporting documentation” and, therefore, inadequate to survive summary judgment.36 No evidence was presented that the defendants “intended to run Three Crown out of business.”37 Since the lost profits claimed were unduly speculative, they were not recoverable.

Flexibility Theory Differs from Election of Remedies
The flexibility theory’s directive, that recovery of out-of-pocket or lost profit damages presents inconsistent and mutually exclusive modes of recovery, is conceptually analogous to — but nevertheless quite different from — the separate doctrine of “election of remedies.” They should not be confused. The flexibility theory limits the type of damages that may be sought arising out of a particular cause of action. Election of remedies allows a plaintiff to present inconsistent causes of action in hopes of recovering under any theory.

In both situations, a plaintiff is limited to one avenue of recovery in order to avoid the unfairness (to the defendant) of double damages.38 The flexibility theory represents an either/or damage model (lost profits or restitution) which is determined by the factual proof available. In contrast, under the election of remedies theory, a plaintiff may pursue alternative theories of liability, rather than inconsistent theories of damages, to a single recovery.

The doctrines differ because they come into play at different stages of the proceedings. Under the flexibility theory of damages, the finder of fact does not even get to consider awarding any damages unless and until adequate legal causation is demonstrated. Absent causation, there is no remedy. Once causation is demonstrated, whether out-of-pocket or lost profit damages are available depends on the foreseeability of the harm. In contrast, while the election of remedies doctrine allows the pleading of inconsistent causes of action up to and including the trial (for instance, a plaintiff who cannot recover for breach of contract might still be able to recover for negligence39), the type of damages available does not necessarily hinge on the theory of liability. In other words, the flexibility theory is concerned with the type and extent of damages a jury might ultimately consider following adequate proof of causation, while the election of remedies doctrine allows multiple diametrically opposed theories of liability to proceed to the damage stage.40

A plaintiff who is not able to adequately provide entitlement to damages via a defendant’s causation cannot seek any damages. In contrast, once the element of legal causation is satisfied, a plaintiff may seek appropriate damages — but not elect between out-of-pocket versus “lost profits.” The type of damages available depends on the proof. If lost profits are too speculative to be reasonably proven, the plaintiff’s only permissible remedy will be restitution of out-of-pocket losses. In contrast to a plaintiff electing to travel under multiple theories of liability, a plaintiff does not have the right to seek mutually exclusive forms of damages. The evidence, not a legal theory, will determine which of the two prongs of the flexibility theory (lost profits or restitution) is available.

The flexibility theory makes logical sense. Before an enterprise can hope for profits, it must first engage in an outlay of business costs. Those expenditures, if the enterprise succeeds, are not recouped; they are the price of doing business. Therefore, when a business fails due to the wrongdoing of another (whether through breach of contract, tortious interference, or otherwise), the plaintiff is entitled to recover his or her initial outlay, or the profits that would have been made once the outlay is spent, but not both. Returning to a plaintiff the profits that were lost and also the initial capital expenditures of the venture would constitute a double recovery and put a plaintiff in a better position than if there had been no breach. The flexibility theory prevents such a windfall.41

Flexibility Theory and Expert Testimony
Plaintiffs seeking lost profit damages should make sure their experts are versed in the flexibility theory in general, and that those experts are well-prepared to offer cogent damage models that meet Florida’s “reasonable certainty” requirement. Defendants should be prepared to vigorously cross-examine experts on damages and, if appropriate, move to strike insufficient testimony through pre-trial motions in limine.42 Expert opinions which are based on inappropriate damage models or otherwise fail to anticipate the impact of the flexibility theory on their damage methodology are improper, and can and will be stricken by vigilant courts.

For instance, “conclusory” testimony by a certified public accountant in Forest’s Men’s Shop v. Schmidt, 536 So. 2d 334 (Fla. 4th DCA 1988), led to reversal of a lost profit judgment in a case arising out of a store’s failed expansion plans. The evidence admitted was deemed insufficient to support lost profit damages despite a CPA’s testimony that the business was “a profitable one,” and an economist’s separate testimony that profits “would have [been] realized over the term of the lease.”43

A lost profit award was also reversed in Sihle Ins. Group, Inc. v. Right Way Hauling, Inc., 845 So. 2d 998, 1001 (Fla. 5th DCA 2003), even though the defendant’s request to have the plaintiff’s expert disqualified was not granted. In this case, the expert relied on a series of assumptions that, taken together, were too speculative: The expert assumed production would increase by 250 percent, that a client would have paid a maximum price, and that the market generally would not experience price declines affecting the market. The expert’s testimony was also flawed because he failed to deduct the owners’ salaries from the estimates of future profits. The Silhe case is an example of the flexibility theory’s resistance to an overreaching damage theory. Had the Silhe court allowed salaries to be included as an element of damages, it would have placed the plaintiff in a better position than if the business had not failed. Obviously, had the enterprise succeeded, salaries would have been a necessary business cost, and not a profit.

Federal courts follow these results because they apply state law.44 In Sun Insurance Marketing Network, Inc. v. AIG Life Ins. Co., 254 F. Supp. 2d 1239 (M.D. Fla. 2003), the trial court rejected the testimony of the plaintiff’s forensic accountant where the plaintiff was seeking not just lost profits, but the value of the entire business. As the court noted, an asking price is not the same as the fair market value of a company; the former is a hope that may not be substantiated in the marketplace; the latter is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”45 Further, a successful business valuation for purposes of calculating damages must be factually intensive. The damage expert’s testimony was stricken for at least six reasons: 1) Although an accountant, he was not an appraiser; 2) he had no specialized background in the type of business at issue; 3) he did not research or base his conclusions on the sales of like businesses; 4) he did no independent research, but instead relied on his staff; 5) he did not discuss the three main approaches (assets-based, market, and income) of business valuation; and 6) he did not otherwise discuss the various factors a business valuator should ordinarily consider. The Sun case is a virtual road map of what approach not to take when proffering expert damage testimony on lost profits.

A more favorable result was obtained in Overseas Private Inv. v. Metro. Dade Cty., 826 F. Supp. 1564, 1573 (S.D. Fla. 1993). The Metro court accepted the plaintiff’s damage expert where he derived his “yardstick” of lost profits from “a study of the profits of business operations that are closely comparable to the plaintiff’s or expert testimony based on date concerning operational costs in the industry in question and market data regarding the product at issue.”46 In Electro Service Inc., v. Exide Corp., 847 F.2d 1524, 1527 (11th Cir. 1988), a CPA’s evidence supported a lost profit award where the CPA examined 17 similar commercial accounts, determined their average sales and gross profits using the plaintiff’s financial statements, and then projected monthly gross [lost] profits. Likewise, in G.M. Brod & Co. v. U.S. Home Corp., 759 F.2d 1526 (11th Cir. 1985), CPA evidence on a “yardstick” method was found both admissible and relevant where the data considered was drawn from 900 similar businesses, and the defendant missed “ample opportunity to discredit [the plaintiff’s expert] and show the fallacies in his reasoning and testimony.”

Conclusion
Correctly understanding and applying the flexibility theory, and avoiding the pitfalls associated with ignoring it, is paramount to successful litigation. Why Florida’s courts and practitioners do not make better use of the term itself, if not its concepts, remains a mystery. Routinely using the term “flexibility theory,” when appropriate, will eliminate trial court confusion and avoid unnecessary and expensive appellate litigation. 



1 The only three Florida cases using the term “flexibility theory” are DuPuis v. 79th St. Hotel, Inc., 231 So. 2d 532 (Fla. 3d D.C.A. 1970); Nordyne, Inc. v. Fla. Mobile Home Supply, Inc., 625 So. 2d 1283 (Fla. 1st D.C.A. 1993); and Totale, Inc. v. Smith, 877 So. 2d 813 (Fla. 4th D.C.A. 2004).
2 While only three of those state court opinions are from Florida, the remaining eight are from Maryland, which has been more generous with the use of the term. See note 1, supra.
3 See, e.g., Or. Steel Mills, Inc. v. Coopers & Lybrand, LLP, 83 P.3d 322 (Or. 2004); Sunshine Mining & Refining Co. v. Ernst & Young, LLP, 114 S.W.3d 48 (Tx. App. 2003); Aerotech Resources, Inc. v. Dodson Aviation, Inc., 191 F. Supp. 2d 1209 (D. Kan. 2002); Three Crown Ltd. Partnership v. Salomon Bros., 906 F. Supp. 876 (S.D.N.Y. 1996).
4 DuPuis, 231 So. 2d 532, 535-36 (Fla. 3d D.C.A. 1970). The formula stated in Am. Jur. 2d, as cited by DuPuis, is, “(1) if the defrauded party is content with the recovery of only the amount that he actually lost, his damages will be measured under that rule; (2) if the fraudulent representation also amounts to a warranty, recovery may be had for loss of the bargain, because a fraud accompanied by a broken promise should cost the wrongdoer as much as the latter alone; (3) where 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; and (4) where the damages under the ‘benefit of the bargain’ rule are proved with sufficient certainty, that rule will be employed.” Section 352 of the most recent version of Am. Jur. 2d, “Fraud and Deceit,” pertains to laches in fraud cases, rather than damages.
5 DuPuis, 231 So. 2d 532, 536 (Fla. 3d D.C.A. 1970).
6 Beefy, 267 So. 2d 852, 856 (Fla. 4th D.C.A. 1972).
7 Id.
8 Sundie, 166 So. 2d 152, 153 (Fla. 3d D.C.A. 1974).
9 Resorts International, 503 So. 2d 1293, 1296 (Fla. 3d D.C.A. 1987).
10 Pathway Financial, 588 So. 2d 1000, 1005 (Fla. 3d D.C.A. 1991).
11 Nordyne, 625 So. 2d 1283, 1286 (Fla. 1st D.C.A. 1993).
12 Id. at 1287.
13 Id. at 1286-87.
14 Totale, 877 So. 2d 813 (Fla. 4th D.C.A. 2004).
15 Brooks, 891 So. 2d 1, 2 (Fla. 1st D.C.A. 2005).
16 Hinkle, 278 A.2d 42, 44 (Md. App. 1971).
17 Selman v. Shirley, 161 Or. 582, 607 (1938).
18 Note, Measure of Damages for Fraud and Deceit, 47 Va. L. Rev. 1209 (1961).
19 Hinkle, 278 A.2d at 47. Maryland’s four rules appear to unnecessarily complicate the Florida courts’ formulation of the flexibility theory. Maryland rules three and four are actually flip sides of the same proposition; unduly speculative lost profits cannot be recovered.
20 Downs v. Reighard, 289 A.2d 299 (Md. 1972).
21 City Chevrolet Co. v. Wedeman, 354 A.2d 185 (Md. App. 1976).
22 Aeropesca Ltd. v. Butler Aviation Intern., Inc., 411 A.2d 1055 (Md. App. 1980). Aerospeca provides a three-prong test for lost profit cases: 1) A plaintiff must show the defendant’s breach caused the loss; 2) that damages would have been reasonably foreseen at the time of the breach; and 3) they cannot be recovered unless they can be proven with “reasonable certainty.” Id. at 1068. The terms “reasonably” and “reasonable” in prongs two and three of the test are different. The former refers to the defendant’s ability to predict them while the latter requires the plaintiff to actually prove them.
23 Ward Devel. Co., Inc. v. Ingrao, 493 A.2d 421 (Md. App. 1985).
24 Weisman v. Connors, 519 A.2d 795 (Md. App. 1987). Weisman confirms that in Maryland, as in Florida, benefit-of-the-bargain damages may be available with sufficient proof, but “the preferred test seems to be the ‘out of pocket’ one” designed to put the plaintiff back where he was before the breach. Id. at 749-750.
25 Hoffman v. Stamper, 843 A.2d 153 (Md. App. 2004); Goldstein v. Miles, 859 A.2d 313 (Md. Ct. Spec. App. 2004).
26 Oregon Steel Mills, 83 P.3d 322, 345 (Or. 2004).
27 Id.
28 Sunshine, 114 S.W.3d 48, 52-53 (Tx. App. 2003).
29 Id. at 53-54. Since the ruling for the defendant was based on causation grounds, the defendant’s argument, that lost profits were too speculative to be recovered, was not even reached.
30 See Gregg v. U.S. Ind., Inc., 887 F.2d 1462 (11th Cir. 1989); Laney v. American Equity Inv. Life Ins. Co., 243 F. Supp. 2d 1347 (M.D. Fla. 2003); Western Contracting Corp. v. Bechtel Corp., 885 F.2d 1196 (4th Cir. 1989); Potomac Elec. Power Co. v. Electric Motor & Supply, Inc., 119 F. Supp. 2d 546 (D. Md. 2000).
31 Coghlan v. Wellcraft Marine Corp., 240 F.3d 449 (5th Cir. 2001) (arising out of a Texas district court decision); Aerotech Resources, Inc. v. Dodson Aviation, Inc., 191 F. Supp. 2d 1209 (D. Kan. 2002); Belmac Hygiene, Inc. v. Medstar, Inc., 1998 WL 650251 (S.D.N.Y. 1998). The written Belmac decision is available through Westlaw, the case also appears at 162 F.3d 1147 in a “Table of Decisions Without Reported Opinions.”
32 Coghlan, 240 F.3d at 453.
33 Id. at 453-54.
34 Aerotech Resources, 191 F. Supp. 2d at 1224. For that reason, it is hardly surprising that the Aerotech court cited the Florida Nordyne decision regarding the flexibility theory.
35 Belmac, 1998 WL 650251 at *2.
36 Three Crown, 906 F. Supp. 876, 877 (S.D.N.Y. 1996).
37 Id. at 888.
38 The election of remedies doctrine has as its goal “to prevent a double recovery for the same wrong.” See, e.g., Barbe v. Villeneuve, 505 So. 2d 1331, 1332 (Fla. 1987).
39 The economic loss rule essentially prevents a plaintiff from turning a breach of contract case into a tort case. Initially, it was used to bar virtually every tort claim from appearing in a contractual context. However, numerous exceptions developed over time and Florida courts have substantially retreated from a doctrinaire application of the rule. See, e.g., HTP v. Lineas, 685 So. 2d 1238 (Fla. 1996) (fraud in the inducement to make a contract remains a separate actionable tort); Invo Fla. v. Somerset Ventures, Inc., 751 So. 2d 1263 (Fla. 3d D.C.A. 2000) (breach of fiduciary duty not abolished by rule even if there exists an underlying contract); Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999) (economic loss rule basically intended to limit product liability actions, not bar common law causes of action); Indem. Ins. Co. of N. America v. Amer. Aviation, Inc., 891 So. 2d 532 (Fla. 2004) (rule does not bar actions based on torts which are independent from breaches of contract).
40 See, e.g., Fla. R. Civ. P. 1.110(g); Rausch-Livingston Real Estate, Inc. v. Dixon, 260 So. 2d 290, 291 (Fla. 2d D.C.A.1972) (recovery of the same damages under two separate legal theories allowed); First National Bank of Lake Park v. Gay, 694 So. 2d 784 (Fla. 4th D.C.A. 1997) (plaintiff can recover on only one remedy but has “the right to await the outcome of the entire trial and elect its remedy at the end of trial”); Innovative Material Systems, Inc. v. Santa Rosa Util., Inc., 721 So. 2d 1233 (Fla. 1st D.C.A. 1998) (“An election between mutually inconsistent remedies need only be made before the entry of judgment.”).
41 The securities context provides a common-sense example. If Bob Smith invests $100,000 with the hope of making a better return, he can either be restored to his original position (and have his $100,000 returned) or be awarded the profits Smith reasonably could have made. Allowing Smith to receive both a return of his initial investment, and the profits he might have made on that investment, would be a windfall double recovery, putting Smith in a far better place than had his investment merely been successful.
42 Trial courts have broad discretion in allowing expert testimony, defined in Fla. R. Civ. P. 1.390. See also, Fla. Stat. §90.702, allowing opinion testimony of a person qualified as an expert.
43 Forest’s Men’s Shop, 536 So. 2d 334, 335 (Fla. 4th D.C.A. 1988).
44 Under the “Rules of Decision” Act, 28 U.S.C. §1652, state laws apply in diversity actions unless the U.S. Constitution or conflict with a federal law otherwise requires. See also Erie R.R. v. Thompkins, 304 U.S. 64, 78 (U.S. 1938) (federal court applies the substantive law of the state in which it sits).
45 Sun Insurance, 254 F. Supp. 2d 1239, 1244 (M.D. Fla. 2003).
46 See also Electro Serv., Inc. v. Exide Corp., 847 F.2d 1524, 1527 (11th Cir. 1988).

Jonathan S. Coleman is a graduate of the University of Florida College of Law, and also holds a graduate degree in history from the University of North Carolina at Chapel Hill. He practices in the fields of class action and securities litigation and arbitration in the Tampa office of Johnson, Pope, Bokor, Ruppel & Burns, LLP.

[Revised: 02-10-2012]