Victoriana Building, LLC v. Ft. Lauderdale Surgical Center, etc., Southern Medical, etc., Risk And Capital Limited Partnership, etc., Christopher Brooks, etc., Darla Holdings, etc., Eric Chenven, etc., Caryn Chenven, etc., Neil Weisman, etc., Karolyn Weisman, etc., Sheridan Health Corp., Inc., etc. and Sabine Hesse, etc.

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

VICTORIANA BUILDING, LLC, a Florida limited liability company,
Appellant/Cross-Appellee,

v.

FT. LAUDERDALE SURGICAL CENTER, LLC,
a Florida limited liability company,
SOUTHERN MEDICAL, LLC,
a Kansas limited liability company,
RISK AND CAPITAL LIMITED PARTNERSHIP,
a Delaware limited partnership,
CHRISTOPHER BROOKS, an individual,
DARLA HOLDINGS, LLC, a Florida limited liability company,
ERIC CHENVEN, an individual, CARYN CHENVEN, an individual,
NEIL WEISMAN, an individual, KAROLYN WEISMAN, an individual,
SHERIDAN HEALTH CORP, INC., a Florida corporation, and
SABINE HESSE, an individual, jointly and severally,
Appellees/Cross-Appellant.

No. 4D12-2979

[May 20, 2015]

Appeal and cross-appeal from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Robert A. Rosenberg, Judge; L.T. Case
No. 07-5962 13.

Andrew T. Lavin, Zachary S. Lavin and Daniel E.I. Lavin of Lavin Law
Group, P.A., Fort Lauderdale, for appellant/cross-appellee.

Glenn J. Waldman and Douglas T. Marx of Waldman Trigoboff
Hildebrandt Marx & Calnan, P.A., Fort Lauderdale, for appellees and
cross-appellant Ft. Lauderdale Surgical Center, LLC.

GERBER, J.

In this landlord-tenant dispute, the landlord appeals from the circuit
court’s final judgment in the tenant’s and guarantors’ favor on the parties’
competing claims over a leasehold relationship. The tenant cross-appeals
on the ground that, although the court found for the tenant on the liability
issues, the court did not award damages to the tenant for alleged lost
business value or out-of-pocket expenses. We affirm the circuit court’s
well-reasoned findings of fact and conclusions of law in the tenant’s and
guarantors’ favor on the liability issues. We also affirm the court’s denial
of the tenant’s lost business value claim. However, we reverse the denial
of the tenant’s out-of-pocket expenses claim and remand for the court to
award that claim.

On the liability issues, the court properly determined that the landlord
first breached the lease by failing to provide code-compliant means of fire
egress, and that the tenant therefore was excused from any further
obligation to perform under the lease. See Del Risco v. Indus. Affiliates,
Ltd., 556 So. 2d 1148, 1149 (Fla. 3d DCA 1990) (owner and lessor of
commercial premises had a non-delegable duty to comply with applicable
fire safety regulations for the premises); Ryan v. Landsource Holding Co.,
127 So. 3d 764, 767 (Fla. 2d DCA 2013) (“If one party to an agreement has
breached the agreement, the other party’s failure to continue with the
agreement is not considered a default of the contract.”) (citation and
internal quotation marks omitted).

On the tenant’s lost business value claim, the court properly
determined that the tenant’s proof was speculative and therefore
insufficient. “Lost profits are typically proven by one of two methods: (1)
the before and after theory; or (2) the yardstick test.” Devon Med., Inc. v.
Ryvmed Med., Inc., 60 So. 3d 1125, 1128 (Fla. 4th DCA 2011) (citation
omitted). “The yardstick test is generally used when a business has not
been established long enough to compile an earnings record that would
sufficiently demonstrate lost profits and compares the profits of
businesses that are closely comparable to the plaintiff’s.” Id. at 1129
(citation and quotation marks omitted). Here, the tenant’s expert
consultant, in analyzing the viability of the tenant’s proposed facility, did
not evaluate any comparable facility’s profitability as a “yardstick,” and
the tenant’s expert CPA acknowledged that his report, which was based
on the consultant’s report and forecast, was only “as good or as bad as
[the consultant’s] forecast.” Thus, the tenant’s proof was insufficient. See
Fid. Warranty Svcs., Inc. v. Firstate Ins. Holdings, Inc., 74 So. 3d 506, 514-
15 (Fla. 4th DCA 2011) (“It is as inappropriate to use purely speculative
forecasts of future revenue to determine the market value of a business as
it is to use such speculative forecasts in determining lost future profits.”)
(citation and internal quotation marks omitted).

On the tenant’s out-of-pocket expenses claim, the court did not address
this claim in its findings of fact and conclusions of law. The lease specified
that the tenant was to prepare the premises for a specified use, and the
tenant presented competent, substantial evidence that it incurred actual

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and necessary expenses which the parties contemplated for the
establishment of such use. Thus, the court, having properly found that
the landlord breached the lease first, should have awarded the tenant its
out-of-pocket expenses. Cf. Young v. Cobbs, 110 So. 2d 651, 652-53 (Fla.
1959) (where the lease specified that the premises should be used as a
certain business, the lessee’s actual and necessary expenses incurred in
preparing the premises for such use were such as should reasonably have
been contemplated by the parties, and upon the wrongful eviction of the
lessee, the lessee was entitled to recover the actual expenditures which
were necessary to prepare the premises for such use).

Here, the tenant’s out-of-pocket expenses, as proven at trial and which
flowed from the landlord’s breach of the lease, totaled $975,985. Thus, we
remand for the circuit court to amend the final judgment to award that
amount to the tenant.

Affirmed in part, reversed in part, and remanded for amendment of final
judgment.

STEVENSON and CONNER, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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