The material difference in Florida contract law.

• Author: Crabtree, John G.

The traditional elements of a breach of contract damages claim are well known to every law student: 1) the existence of a valid contract; 2) a breach of that contract; and 3) damages caused by that breach. (1) There is no requirement that the breach be material for the other party to recover damages. As the Restatement (Second) Contracts explains: "[E]very breach gives rise to a claim for damages," (2) and "[a] determination that a failure is not material means only that it does not have the effect of" excusing the future performance of the other party to the contract. (3)

So, until the end of the last millennium, the materiality of a breach of contract was not a proper element of a damages claim in any jurisdiction within the United States. (4) Now, however, four of Florida's district courts of appeal have charted a new course --one requiring proof of a "material" breach, thereby setting Florida adrift from the other 49 states in the country.

The federal judiciary has noticed this novelty of Florida contract law: In a national breach of contract class action, Mazzei v. Money Store, 288 F.R.D. 45 (S.D.N.Y. 2012), the Southern District of New York was required to address Florida's "unusual ... 'materiality' requirement," (5) and in a 2010 decision, Hostway Services v. HWAY FTL, 2010 WL 3604671 (S.D. Fla. 2010), federal Judge Cohn carefully dissected the genesis of Florida's "materiality requirement." In reviewing the Florida intermediate appellate courts' break from traditional contract law, he traced back what had actually happened, focusing on the Fifth District's 2000 decision in Abbott Labs v. GE Capital, 765 So. 2d 737, 740 (Fla. 5th DCA 2000):

Nonetheless, many Florida courts have included "material breach" as one of the elements of a breach of contract claim. Notably, in Abbott Labs, the Florida district court injected the materiality requirement without explanation. Moreover, the cases cited by Abbott Labs do not list "material breach" as an element of a breach of contract action. See [Abbott Labs] (citing Mettler, Inc. v. Ellen Tracy, Inc., 648 So. 2d 253, 255 (Fla. 2d DCA 1994); Abruzzo v. Haller, 603 So. 2d 1338 (Fla. 1st DCA 1992). Furthermore, many of the Florida courts that have listed "material breach" as one of the elements in a breach of contract action can be traced back to Abbott Laboratories. (6)

Federal courts often cite Abruzzo when setting forth the materiality requirement for a breach of contract action under Florida law. Abruzzo, however, does not mention materiality as an element of a breach of contract action. (7)

Having examined the jurisprudential history of Florida's materiality requirement, Judge Cohn concluded that it "appear[ed] to be the result of spontaneous generation." (8)

He was right. Indeed, from the time of Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145 (1854), until its third-millennium "spontaneous generation" in Abbott Laboratories, materiality had never been a required element of a breach of contract damages action in any state court. (9) The Fifth District just "injected the materiality requirement without explanation" in Abbott Laboratories. (10) After that decision, the Fourth District in J.J. Gumberg Co. v. Janis Services, 847 So. 2d 1048, 1049 (Fla. 4th DCA 2003), and the Third District in Murciano v. Garcia, 958 So. 2d 423, 423 (Fla. 3d DCA 2007), added the same, novel element.

Judge Cohn was unable to locate a single case "where the Supreme Court of Florida ha[d] held that a party must prove a material breach to prevail in a breach of contract action." (11) To the contrary, in Found Health v. Westside EKG Associates, 944 So. 2d 188 (Fla. 2006), issued after the Fourth and Fifth districts had already adopted the materiality requirement, the supreme court listed the elements of a third-party breach-of-contract damages claim, but as Sherlock Holmes surely would have noticed, the dog did not bark: (12) The Florida Supreme Court did not add the new "materiality" element. (13)

Like the Florida Supreme Court, the First District has never included materiality as an element for a breach of contract damages claim. The court's decisions simply list the same elements that the Florida Supreme Court and the other 49 states require: 1) a valid contract; 2) a breach; and 3) damages caused by that breach. (14)

Until recently, the Second District had also never included a materiality element for breach of contract damages claims. (15) In June 2013, however, the court announced that the elements of a breach of contract claim were "(1) a valid contract, (2) a material breach, and (3) damages" in Havens v. Coast Florida, P.A., 117 So. 3d 1179 (Fla. 2d DCA 2013). (16) The Havens decision is...