Default On Liability Does Not Equate To Liability For All Damages.

You start celebrating (or lamenting) because the judge granted the motion to default the defendant. But then you pause to figure out what that means for the claimed damages. Is causation deemed established for purposes of establishing damages? Can the plaintiff’s damages expert assume your claimed damages for lost profits were caused by the alleged negligent or wrongful conduct?

ICMFG & Assocs., Inc. v. The Bare Bd. Group, Inc., 238 So. 3d 326 (Fla. 2d DCA 2017) answers those questions and holds that even where damages is the only issue at trial and liability is deemed established, the plaintiff must still prove some connection between the tortious conduct and the damages claimed.

As the decision explains: “‘Florida Rule of Civil Procedure 1.440(c) requires a hearing on claims for unliquidated damages, even if a party has been defaulted.’ Medcom USA, Inc. v. Ryder Homes & Groves Co., 847 So. 2d 594, 596 (Fla. 2d DCA 2003)). ‘[A] defaulted defendant has the right to contest the amount of unliquidated damages and may offer evidence in mitigation thereof.’ Talucci v. Matthews, 960 So. 2d 9, 10 (Fla. 4th DCA 2007).” Id. Therefore, the entry of a default on liability does not make the defendant liable as a matter of law for all of the damages claimed by the plaintiff. See id.

To establish unliquidated damages at trial, a plaintiff must prove that the liability established by the default caused the claimed damages. Id. (citing Rucker v. Garlock, Inc., 672 So. 2d 100, 102 (Fla. 3d DCA 1996); Talucci, 960 So. 2d at 10; Leal v. Waterproofing Sys. of Miami, Inc., 812 So. 2d 473, 473 (Fla. 3d DCA 2002)). “Obviously, the limitation of damages awards to those sustained in consequence of the defendant's act precludes awards for losses attributable to other causes.” Id. As such, any testimony by the plaintiff’s expert on damages must address causation.

In ICMFG & Assocs., Inc., the Second District concluded that the trial court's pretrial ruling that a default on liability was sufficient to establish "the nexus and causation" between the defendant’s tortious acts and the plaintiff’s claim for lost profits was in error. The Second District further concluded that this error prejudiced the defendants throughout the damages trial, because the trial court accepted the plaintiff’s expert’s testimony about the claimed lost profits and based its award of damages for lost profits entirely on the expert's testimony. But the expert failed to consider a link between the defendant’s conduct and its effect on the plaintiff’s business. Instead, the expert assumed that the trial court had already made a ruling in the plaintiff’s favor in that regard. In addition, the defendants were prevented from demonstrating that the plaintiff’s claimed business losses were not as great as claimed or were attributable—in whole or in part—to other causes.

As the Second District explained, the entry of a default against the defendant on the plaintiff’s claim should not have granted the defendant “a blank check on which it could insert the numbers it chose untethered to any link to the effects of the [defendant’s] conduct.” Id. On the contrary, the plaintiff’s lost profits claim was limited to those damages that it could establish were incurred as a consequence of the defendant’s conduct with reasonable specificity and certainty. The Second District reversed the awards for lost profits and remanded for a new trial limited to that issue.

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