In construction disputes, one of the most important issues is whether the party claiming damages can adequately prove its damages at trial. Under Florida law, the burden is on the party seeking damages to prove its damages with a reasonable degree of certainty. While difficulty proving your damages may not be a bar to recovery, the award of damages cannot be based on mere speculation or guesswork. (For more on the burden of proof for construction damages under Florida law, click here.)

Florida law also specifies a “time of breach” standard that requires a party seeking damages based on defective construction work to calculate its damages as of the date of the breach of contract. A recent Florida appellate decision demonstrates the importance of proving damages under the time of breach standard.

In Bandklayder Development, LLC v. Sabga, the owner of a home (possibly a spec home) entered into a contract with two buyers for sale of the home while it was under construction. The contract gave the buyers a one-year warranty along with an agreement from the seller to complete punch list work after a walkthrough of the property.

The buyers sue the seller for construction defects.
The parties closed on the home in 2017, and the seller failed to repair the items on the punch list. After the buyers attempted to have the seller repair the remaining defects for around a year, the buyers served a construction defect notice on the seller pursuant to section 558.004, Florida Statutes. The seller failed to repair the defects, and the buyers sued the seller for breach of contract, violation of the Florida Building Code, and breach of the impaired warranty of fitness.

The trial court finds in favor of the buyers and awards damages.
A bench trial was held with (apparently) only three witnesses — one of the buyers, the buyers’ “construction expert,” and the seller’s corporate representative. The buyers’ expert testified that the buyers’ damages totaled $322,916.36 as of January 2022, which was the date of the expert’s written report. The expert also testified that as of the date of the trial in May 2023, the cost to complete the unfinished work totaled $435,936.75 — an additional 35% due to an increase in construction costs.

After the trial, the trial court found in favor of the buyers (presumably due to the seller’s failure to repair the defects), and the trial court awarded the buyers $425,936.75 — the amount to which the expert testified as the buyers’ damages as of the date of the trial.

The seller appeals and argues the buyers failed to prove their damages.
On appeal, the seller argued that the trial court’s decision should overturned because the buyers failed to prove their damages as of the date of the breach and instead, the buyers merely proved their damages as of the date of the expert’s report and the date of the trial.

The appellate court agreed with the seller and held that the buyers failed to prove their damages at the time of the breach. The court noted that “[i]t is well-established in Florida that damages for breach of a construction contract based on defective work are calculated as of the date of the breach.” As such, the court found that

[the buyers] were required to prove their damages as of the date of the breach, which was in June of 2017 (at the time the transaction closed and [the seller] turned over the property to the [buyers]) or at the latest, April of 2018 (when [the buyers] served their written notice of noncompliance on [the seller]).

The court further wrote that “[w]hile it’s true that the ‘time of breach’ standard ‘is not an inflexible principle,’ ‘damages cannot be based upon speculation or guesswork, but must have some reasonable basis in fact.” (For an example of a general contractor failing to prove its damages against a subcontractor, click here.)

The appellate court concludes the buyers failed to prove their damages at the time of the breach.
The court concluded that “there was no testimony presented to establish the amount of damages suffered by the [buyers] at the time of the breach.” (Emphasis added.) As such, “there is no way to know (without relying on speculation) the proper amount of damages more than five or six years before trial, the date upon which the [buyers] were required by well-entrenched law to establish their measure of damages.”

Given the lack of proof of damages at the time of the breach, the court reversed the award of damages to the buyers and directed the trial court to enter judgment in favor of the seller.

Worse yet, the court refused to allow the buyers a second chance to prove their damages at the time of breach. In that regard, the court noted that “while we acknowledge this may appear harsh, the result here is solely attributable to the [buyers’] failure to prove that which the law clearly requires.” This resulted in the buyers taking nothing, which is a brutal result for the buyers of the property.

Bottom Line: Never underestimate the importance of properly proving your damages in construction disputes. It can lead to stations where even if you “win” on liability, you lose overall because you are not awarded any damages.

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