Damages for Loss of Use in Florida

Florida courts have long relied upon the Restatement (Second) of Torts as governing lawsuits where loss of use damages are at issue. Restatement (Second) of Torts § 928 provides in part:

When one is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for

. . . .

(b) the loss of use.

Restatement (Second) of Torts § 928 (1979).

In the past Florida courts have interpreted the Restatement (Second) to mean that “loss of use damages are only recoverable when an owner suffers a complete deprivation of use of the property.” AT&T Corp. v. Lanzo Constr. Co., 74 F. Supp. 2d 1223 (S.D. Fla. 1999), citing Schryburt v. Olesen, 475 So. 2d 715, 717 (Fla. 2d DCA 1985). Furthermore, courts in Florida agree that “a party is entitled to recover loss of use damages even if a substitute chattel is not utilized.” Lanzo Constr., 74 F. Supp. 2d 1223. With these legal principles in mind the court in Lanzo Constr. found that the complete loss of use of a single fiberoptic cable – not the loss of use of the entire phone system was sufficient to warrant the award of damages. Id. With respect to the measuring loss of use damages, the court found that:

Florida law explicitly provides that loss of use damages are measured by the amount necessary to rent a similar article or other suitable article within which to perform the services usually performed by the damaged article during the period of repair.

Id., citing Mortellaro & Co. v. Atlantic C.L.R. Co., 107 So. 528 (1926). Accordingly, the measure of damages was determined to be the “amount that it would cost to rent a fiberoptic cable” – whether or not the cable was actually rented. Id.

The Florida Supreme Court criticized the outcome reached in Lanzo Constr. in MCI WorldCom Network Servs vs. Mastec, Inc. finding that the damaged cable rather than the entire telecommunication system was the relevant property for loss of use purposes. 995 So. 2d 221, 229 (Fla. 2008). Notwithstanding, the court stopped short of saying that loss of use damages as an element of compensatory damages cannot be awarded where the personal property harmed has not been destroyed. The Florida Supreme Court held that:

loss-of-use damages based on rental replacement value is not the appropriate measure of damages when there have been no such damages incurred and the telecommunications traffic carried by the damaged cable has been accommodated within the telecommunications carrier’s own network so there has been no loss of service

MCI WorldCom Network Servs vs. Mastec, Inc., 995 So. 2d at 229-30.

Subsequent cases decided by courts interpreting Florida laws with respect to damages for loss of use have narrowed the potential breadth of MCI WorldCom’s holding. In a homeowner’s construction completion delay case, the Third District Court of Appeal found that a complete loss of use does not necessarily mean “all use” when considering loss of use damages arising from delayed occupancy; rather, loss of use of a substantial portion of the homeowner’s premises may be sufficient. See Gonzalez v. Barrenechea, 170 So. 3d 13 (Fla. 3d DCA  2015).

In July 2017, the U.S. District Court in the Middle District of Florida declined to dismiss a complaint brought by a telecommunications company against a party that severed one of its cables distinguishing the MCI WorldCom case wherein the Florida Supreme Court held that MCI could not recover loss of use damages as a result of MCI WorldCom suffering “no actual loss of use or rental of replacement cable, nor interruption of service to MCI’s customers.” Level 3 Communs., LLC v. Salser Constr., Inc., 2017 U.S. Dist. LEXIS 105896, *4 (M.D. Fla. July 10, 2017). Level 3 Communs. alleged in its complaint that it lost the ability to provide services to numerous customers in connection with Salser’s damage to a fiber-optic cable. Level 3 Communs., 2017 U.S. Dist. LEXIS 105896 at *1. Unlike the holding of the MCI WorldCom case, the court in Level 3 Communs did not determine that the entire telecommunication system was the relevant property for loss of use purposes.

Loss of use damages appear to be an evolving concept in Florida which should be followed closely by all construction litigators who practice in Florida.