R & B Holding v. Christopher Advertising

• Decision Date: 04 April 2008
• Docket Number: No. 3D06-2669.,No. 3D06-1560.,3D06-1560.,3D06-2669.
• Citation: 994 So.2d 329
• Parties: R & B HOLDING COMPANY, INC., a Florida corporation d/b/a/ Kendall Toyota, Appellant, v. CHRISTOPHER ADVERTISING GROUP, INC., a Florida corporation, Appellee.
• Court: Florida District Court of Appeals

994 So.2d 329

R & B HOLDING COMPANY, INC., a Florida corporation d/b/a/ Kendall Toyota, Appellant, v. CHRISTOPHER ADVERTISING GROUP, INC., a Florida corporation, Appellee.

No. 3D06-1560.

No. 3D06-2669.

District Court of Appeal of Florida, Third District.

April 4, 2008.

Greenberg Traurig and Arthur J. England and Julissa Rodriguez and Brigid F. Cech Samole, Miami; Ruden, McClosky, Smith, Schuster & Russell and Peter L. Wechsler, Miami; Ruden, McClosky, Smith, Schuster & Russell and John H. Pelzer, Fort Lauderdale, for appellant.

Wetherington, Klein & Hubbart and Phillip A. Hubbart; Ross and Girten and Lauri Waldman Ross, Miami, for appellee.

Before COPE, CORTIÑAS, and SALTER, JJ.

CORTIÑAS, J.

We consider whether replacement cost is the proper method of valuation for commercial property that was converted over ten years ago where there is no showing of any need for the reproduction of the property and no intention to reproduce it. Because we conclude that replacement cost is not the proper method of valuation in such an instance, we reverse.

Appellant, R & B Holdings, Inc. d/b/a Kendall Toyota ("Kendall Toyota"), appeals a final judgment totaling $5,822,751.26 after a jury trial. Plaintiff, Christopher Advertising Group, Inc. (the "Agency") sued Kendall Toyota for conversion and civil theft of advertising materials and other property belonging to the Agency but kept by Kendall Toyota after their business relationship was terminated. In an earlier appeal, we determined that the proper measure of damages for reproduction of certain converted database materials that were necessary to the Agency to re-commence its business operations was the cost of recreating the database. Christopher Adver. Group, Inc. v. R & B Holding Co., 883 So.2d 867 (Fla. 3d DCA 2004) ("Christopher I"). We also noted that the Agency may be entitled to lost profits if shown with certainty and demonstrated causation. Id. at 875. However, in Christopher I, we were not confronted with, and therefore did not address, the valuation of other unreturned advertising materials ("Unreturned Items") that were not reproduced by the Agency. After remand and a subsequent trial, the Agency was awarded $2,240,368.25 in damages for conversion of the Unreturned Items plus interest in the amount of $2,068,995.67. In addition, the Agency was awarded the principal sum of $220,412.50 in damages for the civil theft claim, which, along with interest, was trebled.

Appellant argues that the Agency was foreclosed from seeking damages for the Unreturned Items under the doctrine of law of the case. The law of the case mandates that "questions of law actually decided on appeal must govern the case in the same court and the trial court, through all subsequent stages of the proceedings." See State v. McBride, 848 So.2d 287, 289 (Fla.2003) (quoting Fla. Dep't of Transp. v. Juliano, 801 So.2d 101, 105 (Fla.2001)); U.S. Concrete Pipe Co. v. Bould, 437 So.2d 1061 (Fla.1983); Thornton v. State, 963 So.2d 804 (Fla. 3d DCA 2007). However, because we did not consider whether replacement cost was the proper methodology for valuation of the Unreturned Items, we find that the doctrine of law of the case has no application. Instead, the issue in this second appeal involves the proper method for computing damages related to the Unreturned Items.

The Agency contends that this issue was not preserved for appeal because Appellant's primary basis for excluding evidence on replacement cost for the Unreturned Items was the "law of the case" doctrine. We disagree. Appellant properly preserved the issue of whether or not replacement cost was a proper methodology for valuation of the Unreturned Items by filing an extensive pre-trial motion in limine opposing the application of replacement cost as the basis for damages. The trial court heard argument on this motion and subsequently denied the motion. The very first ground cited in its motion in limine concerned "the proper measure of damages" and, throughout the motion, Kendall Toyota opposed replacement cost as a proper method of damages. As such, we find that the issue was properly preserved. See Fittipaldi USA, Inc. v. Castroneves, 905 So.2d 182, 187 (Fla. 3d DCA 2005). We next examine de novo whether replacement cost was a proper methodology for computing damages concerning the Unreturned Items.

Determining whether a particular methodology is a proper method for computing damages is a question of law and not a jury determination. The appropriate measure of damages, as compared with the amount of damages awarded, involves a legal question reviewable on appeal. See Haworth, Inc. v. Herman Miller, Inc., 162 F.R.D. 286 (W.D.Mich.1995); Merchant v. Peterson, 38 Wash.App. 855, 859, 690 P.2d 1192 (Wash.Ct.App.1984) (the appropriate measure of damages, as compared with the amount of damages awarded, involves a legal question reviewable on appeal); see also Reider v. Thompson, 197 F.2d 158, 161 (5th Cir.1952) (noting that measure of damages is a rule of law and ascertainment of damages is a matter of evidence); St. Louis Sw. Ry. Co. v. Hill Bros., 58 S.W.2d 861, 862 (Tex.Civ. App.1933) ("As to whether damages have been sustained is a question of fact for the jury. The rule to measure these damages is one of law...."); Gulf, C. & S.F. Ry. Co. v. King, 174 S.W. 960, 961 (Tex.Civ. App.1915) ("What is the proper measure of damages is a rule of law, to be applied by the court, as applicable to the facts given in evidence.")

The correct measure of damages in conversion is the fair market value of the property on the date of the conversion, plus interest at the legal rate from the date of conversion until entry of the final judgment. Florida Farm Bureau Casualty Ins. Co. v. Patterson, 611 So.2d 558 (Fla. 1st DCA 1992). However, given the compensatory nature of an award of damages in conversion cases, the meaning of fair market value varies with the context in which the standard is applied. Merchant, 38 Wash.App. at 859, 690 P.2d 1192 (citing John W. McDougall Co. v. Atkins, 201 Tenn. 589, 301 S.W.2d 335, 337 (1957) and C. McCormick, Damages §§ 43, 44 (1935)).

Our holding in Christopher I rested, in part, on the Restatement (Second) of Torts, which provides, in pertinent part:

§ 927 Conversion or Destruction of a Thing or of a Legal Protected Interest in it

(1) When one is entitled to a judgment for the conversion of a chattel or the destruction or impairment of any legally protected interest in land or other thing, he may recover either

(a) the value of the subject matter or of his interest in it at the time and place of the conversion, destruction or impairment ...

(2) His damages also include:

(a) the additional value of a chattel due to additions or improvements made by a converter not in good faith;

(b) the amount of any further pecuniary loss of which the deprivation has been a legal cause;

(c) interest from the time at which the value is fixed; and

(d) compensation for the loss of use not otherwise compensated.

Restatement (Second) of Torts § 927 (1979) (emphasis added). Thus, compensation for pecuniary losses caused by the deprivation of the converted property is contemplated under the Restatement, as is compensation for loss of use not otherwise compensated. However, at the second trial of this case, no testimony was presented by plaintiff which tended to show any losses for the Unreturned Items. Nor was there any testimony that the decade-old advertising materials, for which plaintiff had been previously compensated by clients, was necessary for the Agency's ongoing business operations. Indeed, Paul Christopher, the Agency's principal, testified he had no intention to reproduce the Unreturned Items. Under these facts and in light of the testimony in this case, replacement cost is not the proper measure of damages for determining the value of the Unreturned Items.

Because there are no Florida cases which address the proper method for valuation of the Unreturned Items, we look to other jurisdictions which, under their respective facts, reject replacement cost as the proper methodology for valuation. For example, Long v. Arthur Rubloff & Co., 27 Ill.App.3d 1013, 327 N.E.2d 346 (1975), involved a dispute between a real estate agency and a former employee. The employee argued that following his termination, the real estate agency took possession of files which included leasing data compiled by the employee prior to his employment with the real estate agency. The court found that the leasing data was "not an ordinary object of commerce in the sense that an ascertainable market value could be attributed to it. Furthermore, the nature of the thing converted was not such as to make production or replacement cost a viable alternative." Id. at 355. Noting that the "leasing data allegedly was of a commercial and economic value to [the employee]," the court found:

Given its peculiar nature, we believe that the proper basis for determining compensatory damages is its actual value to [the employee], and that [the employee] was entitled to demonstrate its value to him by such proof as the circumstances admit. But the burden of proving the value of property converted is upon the plaintiff ... and the evidence must afford some reasonable and proper basis for ascertaining value. At a minimum, it must rise to the dignity of proof, and supply such elements or standards for measuring value to enable the trier of fact to exercise its judgment.

Id. (emphasis added) (citations omitted). While the court held that the employee was entitled to recover the value of the leasing data appropriated by the real estate agency, it also held that the mere opinion of the employee as to the reasonable value of the leasing data was insufficient to establish damages. The court further noted that:

[O]ther than [the employee's] opinion, there was absolutely no testimony from which the trier of fact could determine the value of the leasing data to the [employee...