State Dept. of Transp. v. Manoli, 93-0777
| Decision Date | 30 November 1994 |
| Docket Number | No. 93-0777,93-0777 |
| Citation | 645 So.2d 1093 |
| Parties | 19 Fla. L. Weekly D2510 STATE of Florida DEPARTMENT OF TRANSPORTATION, Appellant, v. James J. MANOLI, et al., Appellees. |
| Court | Florida District Court of Appeals |
Thornton J. Williams, Gen. Counsel, and Gregory G. Costas, Asst. Gen. Counsel, Tallahassee, for appellant.
Paul A. Lehrman, Lehrman and Denker, Tallahassee, for appellee Louis A. Thomas, Jr.
We reverse a business damage award in an eminent domain case because the trial court allowed the property owner's expert to give an opinion of business damages based on lost profits which erroneously included both the profits of the business and what the owner, who worked full-time in the business, was paying himself.
Louis Thomas had a contract with Hess to operate a Hess service station near the intersection of Dixie Highway and Commercial Boulevard in Broward County. A portion of the property was taken by the DOT when Dixie Highway was widened, and the DOT agreed that the taking destroyed the utility of the service station. The property was owned by Hess. The only issue in this case was the amount of business damage suffered by Thomas.
Thomas, who was 66 years old, had operated this service station for over 20 years. He worked there approximately 40 hours a week, collecting payment from customers and ordering gasoline and other supplies. Thomas had another employee who performed other work.
Thomas' business was incorporated; however, it was Thomas who personally had the lease with Hess. Initially the corporation was named as a party, but prior to trial Thomas was substituted in place of the corporation because he was the party to the lease. Craig Fetherman, a CPA who was Thomas' expert, was deposed while the corporation was still the party, and at that time he gave an opinion as to business damage based on lost profits of $167,000. His opinion was based on the corporate tax returns.
When Thomas was substituted for the corporation, shortly prior to trial, Fetherman changed his opinion of business damages. He still calculated the lost profits by deducting from the gross income the cost of goods sold, wages, rent, and other expenses necessary to operate the business, but was allowed to testify, over the objection of the DOT, that no portion of what Thomas paid himself should be deducted. His new opinion as to the total business damages was $274,000. The jury verdict was $225,000.
As our supreme court has pointed out, business damages are allowed only as a matter of legislative grace under section 73.071(3)(b), Florida Statutes (1991), and are not required to be paid by either the Florida or United States Constitutions. Texaco, Inc. v. Dept. of Transp., 537 So.2d 92 (Fla.1989), and cases cited therein. Therefore the statute, as a legislative grant of a property right, must be strictly construed in favor of the state. Tampa-Hillsborough County Expressway Auth. v. K.E. Morris Alignment Serv., Inc., 444 So.2d 926 (Fla.1983).
Business damages are "in the nature of lost profits attributable to the reduced profit-making capacity of the business caused by a taking of a portion of the realty or the improvements thereon." LeSuer v. State Road Dept. of Fla., 231 So.2d 265, 268 (Fla. 1st DCA 1970); quoted with approval in City of Tallahassee v. Boyd, 616 So.2d 1000 (Fla. 1st DCA 1993), rev. granted sub nom, Weaver Oil Co. v. City of Tallahassee, 632 So.2d 1029 (Fla.1994). See also, Mulkey v. Div. of Admin., State of Fla., Dept. of Transp., 448 So.2d 1062 (Fla. 2d DCA 1984).
Thomas cites no authority which would support the computation of business damages based on lost profits without deducting his wages. He relies on Matthews v. Division of Administration, State of Florida, Department of Transportation, 324 So.2d 664 (Fla. 4th DCA 1975); however there the expert was not using lost profits, but rather goodwill and other factors to come up with an opinion as to the business damages. This court observed in Matthews that the legislature did not define "business...
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...977, 979 (Fla. 1st DCA 1996)(determination of lost profits must deduct salary paid to owner/supervisor); State Dept. of Transp. v. Manoli, 645 So.2d 1093, 1094 (Fla. 4th DCA 1994)(where salary paid to business owner was not deducted before calculating lost profits expert testimony was based......
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...profits due to a breach of contract is strictly a legal issue. Thus, our standard of review is de novo. See State Dep't of Transp. v. Manoli, 645 So. 2d 1093 (Fla. 4th DCA 1994)(finding that an expert's calculation of lost profits was based on a misconception of the law where the expert's m......
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