Tampa, Florida - Business Law lawyer represented Appellants with in a dispute regarding hotel signage.

The parties operate two competing hotels on adjacent

properties on the same block. Although the hotels share road

access, only Bass's hotel fronts the main road; someone entering

from that side would have to proceed around Bass's hotel in order

to reach Devom's hotel.

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At the shared point of ingress and egress from the main road,

a single monument displayed signage for both hotels. Because the

monument was located on Bass's property, Devom had obtained a

recorded easement giving it the perpetual right to install and

maintain its own signage on the monument, which signage could

not be modified without the consent of both parties.

Nonetheless, in March 2018 Bass removed the monument that

displayed both hotels' signage and replaced it with a new one

identifying only its hotel, not Devom's. As a result, someone driving

by the block on the main road would not see a sign for Devom's

hotel, only Bass's. So Devom sued Bass, seeking a declaration of

its rights under the easement, the replacement of the sign, and lost

profits for the period that the sign was removed.

At the bench trial, to support its lost profits claim, Devom

offered various financial documents from 2016-2017, including tax

returns and profit-and-loss statements. It also submitted

"statistical reports" from 2015-2018 setting forth its occupancy data

and revenues—but not expenses or profits—for each year.

Devom's damages calculation began with tripling its average

daily revenue, based on its principal's "estimate" that the missing

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sign prevented Devom from renting three rooms per day. That

value was then multiplied by the number of days the sign was

down. In all, Devom sought nearly $150,000 in lost profits from the

March 2018 sign removal through the July 2020 trial.

Bass's counsel asserted that this evidence was insufficient to

permit an award of lost profits under settled law requiring evidence

of expenses or profits, not just revenues. In support, he pointed to

Devom's principal's admission that when a room is not rented, the

hotel's expenses are lower too, not just its revenues, because, for

example, an unrented room uses less utilities and does not require

cleaning services like a rented room does.

Acknowledging that Bass's argument in this regard was "well

taken," the court declined to award Devom the claimed amount of

its lost revenues. Instead, the court ruled without explanation that

"at best, a 50 percent margin is available" for Devom, cutting

Devom's demand in half and then "basically round[ing] that to a

$75,000" award for the period the sign was removed. Bass's motion

for rehearing, which again challenged Devom's failure to admit

evidence of its expenses or profits for the relevant period of time,

was denied. This appeal followed.

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ANALYSIS

"The question of the methodology employed in calculating

damages . . . involves a question of law that we review de novo."

ICMfg & Assocs. v. Bare Board Grp., 238 So. 3d 326, 335 (Fla. 2d

DCA 2017). "If the trial court employed the correct measure of

damages, we review the damages award for support by competent,

substantial evidence." Asset Mgmt. Holdings, LLC v. Assets

Recovery Ctr. Invs., LLC, 238 So. 3d 908, 911 (Fla. 2d DCA 2018).

Generally, a business seeking to recover lost profits "must

prove that 1) the defendant's action caused the damage and 2) there

is some standard by which the amount of damages may be

adequately determined." W.W. Gay Mech. Contractor, Inc. v.

Wharfside Two, Ltd., 545 So. 2d 1348, 1351 (Fla. 1989). In

applying the second prong, Florida courts have held that "[e]vidence

pertaining to loss of income or gross receipts, without specific

evidence concerning expenses, is inadequate to prove lost profits."

HCA Health Servs. of Fla., Inc. v. CyberKnife Ctr. of the Treasure

Coast, LLC, 204 So. 3d 469, 472 (Fla. 4th DCA 2016) (citing E.T.

Legg & Assocs. v. Shamrock Auto Rentals, Inc., 386 So. 2d 1273,

1274 (Fla. 3d DCA 1980) ("As to the damages, the only evidence

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presented pertained to income or gross receipts, not profits, and

testimony concerning expenses did not establish specific dollar

amounts. The evidence was therefore inadequate to prove lost

profits.")).

"Under Florida law, 'an inability to establish the amount of lost

profits with absolute exactness will not defeat recovery.' " Del Monte

Fresh Produce Co. v. Net Results, Inc., 77 So. 3d 667, 675 (Fla. 3d

DCA 2011) (quoting Nat'l Papaya Co. v. Domain Indus., 592 F.2d

813, 818 (5th Cir. 1979)). "However, the countervailing rules

require 'reasonable certainty' in the proof of those damages and the

assumptions underlying them." Id. (quoting Nat'l Papaya Co., 592

F.2d at 822). "Damages cannot be based upon speculation or

guesswork, but must have some reasonable basis in fact." Id.

(quoting Smith v. Austin Dev. Co., 538 So. 2d 128, 129 (Fla. 2d DCA

1989)).

Here, the trial evidence was insufficient as a matter of law to

support the award of lost profits because it addressed only revenues

from the relevant period of time, not expenses—or, consequently,

profits. The financial documentation adduced in support of the

award consisted of (1) "statistical reports" of room occupancy and

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revenues from 2015-2018, (2) partnership tax returns from 2016-

2017, and (3) profit-and-loss statements from 2016-2017. The only

evidence addressing the period of time since the March 2018 sign

removal at issue is the 2018 statistical report, which contains no

information relating to expenses or profits, only revenues.

Indeed, at trial, Devom's principal expressly agreed that

Devom's "damages are based on a loss of revenue not a loss of

profit." In his words, "[t]he numbers that I'm providing for my

losses are based on gross revenues, not net profits." Even though he

admitted that Devom's 2018 and 2019 tax returns had already been

prepared at the time of the July 2020 trial, neither return was

offered into evidence. And although Devom's principal also

admitted that the hotel's expenses were lower when rooms were not

rented, he declined to give specific figures when asked. Thus,

Devom failed to satisfy the settled requirement of providing evidence

of expenses to support the lost profits award. See HCA Health

Servs., 204 So. 3d at 472; E.T. Legg & Assocs., 386 So. 2d at 1274.

Notably, this case starkly illustrates the reason for the

requirement. Devom's principal candidly testified that the reason it

was declining to provide evidence of its expenses was that "each

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year expenses can go up. I can have a water boiler go bad. My

gross—my net profit is not directly related to my gross revenue."

Consistent with that explanation, Devom's tax returns that

were admitted at trial reflected higher revenues but lower profits in

2017 than 2016. Devom's principal accordingly admitted that,

comparing 2017 to 2016, Devom "generated more revenue but . . .

made less money." Absent comparable evidence from the period of

time after the sign was removed, there is no way to tell whether that

trend continued or not. Thus, evidence of revenue without

corresponding evidence of expenses fails to answer the question of

whether profits were lost.

In addition to the absence of any evidence of expenses during

the relevant time period, the record also lacks support for at least

two critical components of the damages calculation. First, Devom's

principal never provided any basis for his foundational assumption

that the hotel lost revenue from three rooms per day during the

period the sign was removed. When pressed on the basis for the

three-rooms estimate underpinning the entire damages calculation,

he offered only his general experience as a hotelier and his belief

that "if you don't have a sign on the road, whether you're a hotel, a

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McDonald's, a Starbucks, or lawyer, people unfortunately won't

know you're there and they won't be able to come visit your

establishment." Although Devom's principal admitted that the hotel

was still able to be found online and by potential customers driving

from another direction not impacted by the sign removal, he

declined to provide any source for the three-rooms-per-day figure.

And second, there also is no record support for the trial court's

ruling that "at best, a 50 percent margin is available for" Devom and

thereby calculating the award by halving Devom's proposed

damages figure then "basically round[ing] that to a $75,000" award.

It is unclear how the trial court arrived at that finding, which does

not appear to bear any relationship to any of the testimony or

documentary evidence. Thus, the damages computation also lacks

sufficient certainty regarding the underlying assumptions and the

margin applied. See Del Monte, 77 So. 3d at 675.

Absent extraordinary circumstances, the appropriate remedy

for a failure to admit sufficient evidence to support an award of lost

profits is a reversal of the award. See, e.g., Asset Mgmt. Holdings,

238 So. 3d at 912-13 (reversing lost profits award because "[t]he

burden of proving damages rested solely with the plaintiff entities,"

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who failed to carry it); see also Tracey v. Wells Fargo Bank, N.A.,

264 So. 3d 1152, 1164 (Fla. 2d DCA 2019) ("The general prohibition

in such cases against 'second bites at the apple' is a sound one that

is subject only to the exception of extraordinary circumstances.").

Because no extraordinary circumstances are apparent here,

we accordingly reverse the lost profits award and remand with

instructions for the trial court to enter judgment in favor of Bass on

Devom's claim for lost profits. The final judgment is otherwise

affirmed.