SUPREME COURT OF FLORIDA. CASE NO.: SC L.T. Case No.: 3D DOLL ENTERPRISES, INC, Petitioner, GUILLERMO SOSTCHIN, Respondent.

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1 SUPREME COURT OF FLORIDA CASE NO.: SC L.T. Case No.: 3D DOLL ENTERPRISES, INC, Petitioner, v. GUILLERMO SOSTCHIN, Respondent. RESPONDENT S JURISDICTIONAL BRIEF PHILIP D. PARRISH, P.A. One Datran Center 9100 South Dadeland Boulevard Penthouse One, Suite 1710 Miami, Florida FBN Counsel for Respondent

2 TABLE OF CONTENTS Page TABLE OF CONTENTS...i TABLE OF AUTHORITIES... ii STATEMENT OF THE CASE AND FACTS... 1 SUMMARY OF ARGUMENT... 3 ARGUMENT... 4 I. THE DISTRICT COURT DID NOT USURP THE JURY S FUNCTION BY REWEIGHING OR REEVALUATING THE EVIDENCE: RATHER, IT PROPERLY SERVED ITS FUNCTION AS THE LEGAL ARBITER OF WHAT CONSTITUTES ADMISSIBLE EXPERT TESTIMONY... 4 II. THE DISTRICT COURT S OPINION DOES NOT CONFLICT WITH THIS COURT S OPINIONS CONCERNING THE AVAILABILITY OF A REASONABLE YARDSTICK FOR MEASURING PROSPECTIVE LOST PROFITS; TO THE CONTRARY, IT RELIES UPON THOSE DECISIONS AND POINTS OUT THAT THE PETITIONERS TRIED TO RELY ON ONLY A FEW INCHES OF THE AVAILABLE YARDSTICK... 7 CONCLUSION... 9 CERTIFICATE OF SERVICE... 9 CERTIFICATE OF COMPLIANCE WITH FONT STANDARD... 9 i

3 TABLE OF AUTHORITIES Cases Page Cihle Ins. Group, Inc. v. Rightway Hauling, Inc., 846 So.2d 998 (Fla. 5 th DCA 2003)... 5 Cripe v. Atlantic First National Bank of Daytona Beach, 422 So.2d 820 (Fla. 1982)... 4, 5 Dept. of Health and Rehabilitation Services v. National Adoption Counseling Services, Inc., 498 So.2d. 888 (Fla. 1986) Helman v. Seaboard Coast Lines Railroad Co., 349 So.2d 1187 (Fla. 1977)... 4, 5 Twyman v. Roell, 129 Fla. 2, 166 So. 215 (Fla. 1936)... 7 W.W. Gay Mechanical Contractor v. Wharfside Two, Ltd., 545 So.2d 348 (Fla. 1989)... 3, 7, 8 Westerman v. Shell s City, Inc., 265 So.2d 43 (Fla. 1972)... 5 ii

4 STATEMENT OF THE CASE AND FACTS 1 This is a lawsuit filed by a commercial tenant (Petitioner, Doll Enterprises, Inc., referred to as King Shoes ), against its landlord (Respondent, Guillermo Sostchin, referred to as Landlord ), arising out of the destruction of the leased premises in a fire. King Shoes commenced operations selling inexpensive shoes at Landlord s property in During the first three years of operation King Shoes incurred an accumulated net loss, its tax returns indicating a loss of $16,220 in 1994, a profit of $11, 833 in 1995, and a loss of $1,513 in In 1997, the year immediately preceding the fire, King Shoes had its best year, and its tax return indicates it made a net profit of $31,762. Within 6 weeks of the fire, King Shore reopened in a different building approximately a block and a half away with the same employees, and was still in business when this lawsuit was filed in King Shoes closed its business in the summer of 2000, about a year prior to the trial, and claims it incurred losses at the new location. (A. 2-3) 1 This Statement of the Case and Facts is, as it should be, taken from within the four corners of the District Court s Opinion. 1

5 Despite the modest and short term nature of King Shoes pre-fire profits, King Shoes expert accountant opined that the fire had resulted in lost prospective profits in the following amounts: (A. 3) $199, $170, $164, $169, $174, $179, $130,356 Those inflated figures for lost prospective profits prompted the District Court to observe that: (A. 3) The accounting alchemy by which this humble enterprise was transformed into an engine of commerce is made possible only by first improperly failing to include officer compensation as part of the corporation s expenses, and thereby basing all assumptions upon gross profits, rather than net profits as the law requires. The District Court explained that the accountant s testimony was legally flawed because it was based upon the business pre-fire gross profits, rather than net profits, contrary to Florida law. (A. 3) [T]hese improperly inflated figures were used as a jumping-off point to extrapolate continued rapid growth. (A. 4) Contrary to the 2

6 Petitioner s assertion that the District Court rejected the accountant s methodology without explanation (Petitioner s Jurisdictional Brief, pg. 2), the District Court carefully and cogently explained why it is improper to base a prospective loss of corporate profits on past gross income, rather than net income. (A. 3;5; 6) The court accurately observed that the use of gross profit figures was an error which permeated and invalidated all other conclusions of King Shoes expert. (A. 7) Accordingly, the District Court reversed and remanded for a new trial on that element of damages only. (A. 1) SUMMARY OF ARGUMENT There is no conflict jurisdiction here. The District Court did not usurp the jury s function by reweighing or reevaluating the evidence presented at trial to come to a different conclusion. Rather, the District Court properly decided, as a matter of law, that certain evidence should not have been presented to the jury. That evidence was the Plaintiff/Petitioner s accounting expert s testimony concerning prospective lost profits. The reason that the testimony was inadmissible was that it was based upon the company s past gross profits, rather than past net profits. Accordingly such testimony was contrary to Florida law and was inadmissible. Nor is there conflict with this Court s opinion in W.W. Gay Mechanical Contractor v. Wharfside Two, Ltd., 545 So.2d 348 (Fla. 1989). That opinion requires 3

7 that there be admissible proof of lost profits. There was no such proof here, as the Petitioner s expert began with a highly inflated estimate of past lost profits by utilizing gross profits rather than net profits. He then extrapolated those numbers to create an entirely unsupported trend which, as the District Court observed, turned this humble enterprise... into an engine of commerce.... (A. 3) This Court should decline to exercise jurisdiction because the District Court s opinion does not expressly or directly conflict with any decision of this or any other Florida court. ARGUMENT I. THE DISTRICT COURT DID NOT USURP THE JURY S FUNCTION BY REWEIGHING OR REEVALUATING THE EVIDENCE: RATHER, IT PROPERLY SERVED ITS FUNCTION AS THE LEGAL ARBITER OF WHAT CONSTITUTES ADMISSIBLE EXPERT TESTIMONY Petitioner asserts that the District Court s determination that Petitioner s expert accounting testimony was inadmissible on several legal bases (i.e., gross vs. net profits, and speculativeness) constitutes a reweighing of the evidence. Petitioner then asserts that the District Court s opinion conflicts with this Court s opinions in Cripe v. Atlantic First National Bank of Daytona Beach, 422 So.2d 820 (Fla. 1982); 4

8 Helman v. Seaboard Coast Lines Railroad Co., 349 So.2d 1187 (Fla. 1977), and Westerman v. Shell s City, Inc., 265 So.2d 43 (Fla. 1972). Petitioner is wrong. In each of those cases it was clear that the appellate court had simply reviewed the properly admitted evidence (without finding any of it inadmissible, as here) and rejected the conclusion of the fact finder. Of the three decisions, only Helman involved a jury trial; Cripe and Westerman involved bench trials. In Helman, the District Court had rejected the jury s finding that the train operator s negligence in traveling at an excessive speed and in failing to sound the train s whistle when required was not the proximate cause of the accident in question. 349 So.2d at In Westerman, the court of appeal found one of the trial judge s findings of fact to be contrary to human behavior and decided that the circumstances below controvert [petitioner s] story So.2d at 44 Clearly, there the court took it upon itself to make credibility determinations and reweigh the evidence. Just as clearly, here, however, the District Court properly discharged its function as the legal arbiter of what is and is not admissible expert testimony. Appellate courts make such legal rulings on a regular basis. See, e.g., Cihle Ins. Group, Inc. v. Rightway 5

9 Hauling, Inc., 846 So.2d 998 (Fla. 5 th DCA 2003) (determining policy holder s evidence of lost profits to be too speculative to support damages award). The District Court did not usurp the jury s fact finding function; it corrected a legal error made by the trial court. The District Court properly determined that the Petitioner s accounting expert had buttressed his testimony on an improper foundation. Based upon the record evidence cited in the Opinion at pages 2-3, the District Court concluded that the Petitioner s expert had based his testimony on past gross profits, rather than past net profits. As set forth in detail at pages 5-6 of the District Court s Opinion, such testimony is improper and inadmissible under Florida law. Petitioner is forced to concede that the District Court s primary basis for disallowing the accountant s testimony does not provide a basis for conflict review.... (Petitioner s Brief, pg. 1 n. 1) However, the Petitioner suggests that the issue will be the subject of a point in Doll s initial brief if review is granted. Like the character Wimpy in the old Popeye cartoons, Petitioner will gladly pay the court on Tuesday for a (jurisdictional) hamburger today. Regardless, there is no meat to Petitioner s promise as the District Court s legal ruling rests on a firm bedrock of pecedent. 6

10 II. THE DISTRICT COURT S OPINION DOES NOT CONFLICT WITH THIS COURT S OPINIONS CONCERNING THE AVAILABILITY OF A REASONABLE YARDSTICK FOR MEASURING PROSPECTIVE LOST PROFITS; TO THE CONTRARY, IT RELIES UPON THOSE DECISIONS AND POINTS OUT THAT THE PETITIONERS TRIED TO RELY ON ONLY A FEW INCHES OF THE AVAILABLE YARDSTICK The conflict necessary to invoke this Court s jurisdiction must be express and direct, not inherent or implied. Dept. of Health and Rehabilitation Services v. National Adoption Counseling Services, Inc., 498 So.2d. 888 (Fla. 1986). Petitioner s Jurisdictional Brief compares apples to oranges. Petitioner suggests that the District Court held that there was no yardstick by which to measure lost prospective profits. The yardstick reference comes from this Court s opinions in Twyman v. Roell, 129 Fla. 2, 166 So. 215 (Fla. 1936) and W.W. Gay Mechanical Contractor v. Wharfside Two, Ltd., 545 So.2d 348 (Fla. 1989). But the issue here is not whether there was an available yardstick by which to measure prospective lost profits: after all, King Shoes had been open for three and a half years prior to the fire. Accordingly, there was a three and a half year yardstick. The District Court first held that petitioner s expert testimony was inadmissible as a matter of law because it was premised upon gross rather than net profits. The District 7

11 Court s secondary holding was that it was improper for Petitioner s accounting expert to utilize the last six inches of the available yardstick. As the District Court explained, the original error in failing to exclude officer compensation paid to the corporation s owner in the calculation of net profits resulted in improperly inflated figures [being] used as a jumping off point to extrapolate continued rapid growth. (A. 4) This Court s holding in W.W. Gay Mechanical Contractor, Inc. was specifically relied upon by the District Court below: 545 So.2d at A business can recover lost prospective profits regardless of whether it is established or has any track record the party must prove that 1) the defendant s action caused the damage, and 2) that there is some standard by which the amount of damages may be adequately determined. The District Court concluded: Any yardstick used to show the amount of profits must be reasonable, and the loss of the profits as a result of the fire must be reasonably certain. (A. 8) Petitioner s expert testimony was inadmissible because it relied upon a faulty premise, and then extrapolated from that premise. 8

12 CONCLUSION There is no conflict - - neither express or direct - - between the District Court s opinion and any opinion of this or any other Florida court. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the above and foregoing has been furnished via U.S. mail to: Stabinsky & Funt, P.A., 757 NW 27 Avenue, Third Floor, Miami, FL 33125; Lawrence & Daniels, 100 North Biscayne Boulevard, 21 st Floor, Miami, FL on September 25, CERTIFICATE OF COMPLIANCE WITH FONT STANDARD Undersigned counsel certifies that the size and font style used in this brief is 14 pt, New Times Roman, in compliance with Fla.R.App.P Respectfully submitted, PHILIP D. PARRISH, P.A. One Datran Center 9100 South Dadeland Boulevard Penthouse One, Suite 1710 Miami, Florida Ofc: / Fax: By: PHILIP D. PARRISH FBN