Inflationary costs associated with rebuilding of residential and commercial properties have been a point of contention on First Party Property disputes. The Plaintiffs have argued that they are entitled to increased damages due to inflationary costs for labor and materials over the last several years. This has made it harder to resolve certain claims and led to Plaintiffs submitting multiple increasing estimates over the life of the claim/lawsuit. While the Notice of Intent (“NOI”) statute has alleviated some of these abuses (by forcing the Insureds to provide an estimate prior to filing suit), Insureds have consistently argued that the inflationary costs (especially post Hurricane Ian) are compensable. However, such arguments are improper and if allowed to be presented to a jury could result in judgment reversal if the Plaintiff fails to put forward evidence of damages at the time of the breach.
As the seminal case of Grossman Holdings Ltd. V. Hourihan, 414 So. 2d 1037, 1040 (Fla. 1982) explains, “[d]amages for a breach of contract should be measured as of the date of the breach.” It follows that “[f]luctuations in value after the breach do not affect the nonbreaching party's recovery.” Id. (emphasis added); see also, e.g., Jeremy Stewart Constr., Inc. v. Matthews, 324 So. 3d 41, 42 (Fla. 1st DCA 2021) (per curiam) (“Damages are assessed at the time of the breach rather than at the time of the trial.”); CIMA Cap. Partners v. PH Cellular, Inc., 69 So. 3d 293, 294 (Fla. 3d DCA 2010) (“Damages for breach of contract are to be measured as of the date of breach.”). Given the same, carriers should argue that any damages would have to be assessed at the time of any alleged breach (i.e. before the lawsuit was filed). Any estimates of future costs are simply irrelevant as any “fluctuations in the value after the breach” do not impact their potential recovery. This rule makes sense as the law already provides for prejudgment interest if a judgment is rendered in the Insureds’ favor. What Insureds are really attempting to do is double dip. If they prove their case, they will already receive prejudgment interest from the date of the breach. E.g., CIMA Cap. Partners, 69 So. 3d at 294. And one of the very purposes of prejudgment interest is to account for the erosive effects of inflation. So, by trying to account for inflation postdating the breach, they are asking the Court to award them a double recovery.
Recently, the 3rd DCA heard arguments on the issue of damages postdating the breach in the construction defects context. Bandklayder Dev., LLC v. Sabga, No. 3D23-1906, 2025 WL 15275, at *3 (Fla. 3d. DCA 2025). The case stemmed from a construction defect that occurred in 2017 with the Plaintiffs providing a notice of intent to litigation in the spring of 2018. During trial, the Plaintiff put forward evidence of the cost to repair the defects in 2022 and on the date of their expert’s testimony in May of 2023. The latest estimate increased by 35% (over $100,000) due to the increased construction costs. A Judgment was entered on behalf of the Plaintiff and Defendant appealed. The Sabga court found error in entering judgment in favor of the Plaintiffs because they failed to establish the proper measure of damages as of the date of breach (either 2017 or the latest in 2018). Id. Specifically, the Court found that the Plaintiffs were required to prove their damages as of the date of the breach. The Sabga court went on to reiterate that “While it’s true that the “time of breach” standard “is not an inflexible principle,” Lindon v. Dalton Hotel Corp., 49 So. 3d 299, 306 (Fla. 5th DCA 2010), “damages cannot be based upon speculation or guesswork, but must have some reasonable basis in fact.” Bass Venture Corp. v. Devom, LLC, 342 So. 3d 821, 824 (Fla. 2d DCA 2022) (citation omitted).”
Due to the Plaintiffs’ failure to prove their own damages the Sabga court reversed the judgement for the Plaintiff and entered final judgment for the Defendant. Sabga. Finding that “[t]he Sabgas had a duty to prove each element of their claim, including the proper measure of damages.” See Shechter v. R.V. Sales of Broward, Inc., 328 So. 3d 1053 (Fla. 3d DCA 2021) (affirming trial court’s final judgment in favor of defendant for failure to prove damages, holding that damages are an essential element of a claim for breach of contract); People’s Tr. Ins. Co. v. Alonzo-Pombo 307 So. 3d 840, 843 (Fla. 3d DCA 2020) (“Under Florida law, damages are an essential element of an action for breach of contract.”) (internal citation omitted); Grove Isle Ass’n, Inc. v. Grove Isle Assocs., 137 So. 3d 1081, 1094-95 (Fla. 3d DCA 2014) (“The elements of a breach of contract action are: (1) a valid contract; (2) a material breach; and (3) damages.”)
Therefore, any estimate provided to a carrier tending to show the cost of repairs after the alleged date of breach should be considered irrelevant.
This is not to suggest that an insured will not be compensated for inflationary pressures or the change in the time value of money, but there are statutory mechanisms that achieve this (i.e. pre-judgment interest, or interest under section 627.70131(7)(a) [relating to payments made after 60 days from the first notice of loss]). The main issue is that adjusting the damages determination by including interest is a function of the Court and is not the role for the parties or a witness. To allow a party or witness to proffer such evidence would be an impermissible delegation of a judicial function to one of the parties.
At Cole, Scott & Kissane, we have been successful at the trial level of limiting the introduction of inflated estimates into trial using these arguments.
Should you have any questions or need any assistance on these issues in any claims or lawsuits, please contact CSK's First Party Property Practice Group:
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