Asset Management Holdings, LLC v. Assets Recovery Center Investments, LLC

Summary

The Florida Second District Court of Appeal held that the trial court erred in awarding damages for breach of a walkaway agreement because the plaintiff entities failed to prove damages under the applicable lost-profits measure. The court reversed the damages award, affirmed the disposition of the alternative claims and counterclaims, and remanded for entry of an involuntary dismissal of the breach-of-contract claim. The court did not disturb the finding that the plaintiff entities owned the disputed loans.

Holdings

1. Contract damages must restore the injured party to the position it would have occupied had the contract been performed, not place it in a better position or punish the breaching party. Because the plaintiff entities would have incurred servicing and collection costs absent the breach, they could not recover AMH's gross collections without accounting for those costs.
2. The plaintiff bears the burden of proving all components necessary to establish lost profits, including the costs and expenses that must be deducted from gross revenues.
3. Involuntary dismissal is proper when the plaintiff presents inadequate proof of damages under the correct measure of damages. The trial court therefore erred in denying AMH's motion for involuntary dismissal.

Questions Presented

1. Whether the plaintiff entities could recover all gross collections from the disputed loans as damages for breach of the walkaway agreement without deducting the costs they would have incurred to service and collect those loans.
2. Whether the plaintiff entities' failure to prove the costs necessary to calculate lost profits required involuntary dismissal of their breach-of-contract claim.
3. Whether the trial court properly affirmed or dismissed the parties' alternative damages claims and counterclaims.

Disposition

reversed_and_remanded