MCI WorldCom Network Services, Inc. v. Mastec, Inc.
Docket: No. 03-13022
Court: Court of Appeals for the Eleventh Circuit; May 19, 2004; Federal Appellate Court
Certification has been made from the Eleventh Circuit to the Florida Supreme Court regarding the appeal by MCI WorldCom Network Services, Inc. (MCI) against a district court ruling that denied MCI loss of use damages in a negligence and trespass case against Mastec, Inc., which severed an underground fiber-optic cable. The case revolves around whether loss of use damages are applicable and how they should be measured. MCI's cable, severed during Mastec's excavation in downtown Miami, remained damaged for 97 hours, during which MCI successfully redirected telecommunications signals, avoiding service interruption and profit loss.
MCI claims $868,000 in loss of use damages, representing potential rental costs for an equivalent cable during the repair period, alongside $23,000 in repair costs and punitive damages. The district court ruled that MCI was not entitled to loss of use damages. Under Florida law, loss of use damages can be awarded for damaged chattels, as per the Restatement (Second) of Torts. The parties contest whether the damaged property is the severed cable or the broader cable system. MCI contends that the severed cable is a distinct part of its network and that denying damages penalizes it for implementing a backup cable system designed to prevent service interruptions caused by third parties. MCI argues that its significant investment in the spare cable should not absolve Mastec of liability for its actions.
MCI contends that in Florida, a plaintiff can claim loss of use damages without needing to demonstrate actual damages or the rental of a substitute. MCI relies on Meakin and a comment from the Restatement (Second) of Torts, which supports recovery for loss of use even when the owner has not suffered harm, such as when they weren't using the property or had a substitute at no cost. MCI cites A. Mortellaro Co. v. Atl. Coast Line R. Co. to argue that the mere loss of property use, with a rental substitute available, suffices for claiming damages. MCI maintains that Florida law treats pleasure and commercial property equally regarding loss of use claims, referencing U.S. Supreme Court cases that support loss of use damages for business owners with spare equipment. Mastec counters that the damaged property should be viewed as the entire ring system, arguing that MCI did not experience loss because the ring functioned during repairs, similar to a homeowner in Schryburt v. Olesen who was denied damages despite roof damage. Mastec emphasizes that since the cable's function was maintained by rerouting signals, awarding damages would be excessive. Mastec also asserts that Meakin's reliance on a concurring opinion in Cook v. Packard Motor Car Co. suggests that the property's intended use must be considered in loss of use determinations. Additionally, Mastec argues that even if the severed cable qualifies for loss of use damages, MCI must prove actual lost profits, in line with Florida tort law's principle of compensating for actual, not hypothetical, losses.
Mastec supports its position by referencing the Supreme Court's decisions in *The Conqueror* and *Brooklyn E.*, as well as the Eleventh Circuit's ruling in *Central State Transit Leasing Corp. v. Jones Boat Yard, Inc.* The parties disagree on the appropriate measure of loss of use damages under Florida law. MCI claims that since the 1926 *Mortellaro* case, Florida courts have regarded rental value as the standard for such damages, arguing that the law discourages using non-rental measures like lost profits due to their speculative nature. MCI cites *Maryland Cas. Co. v. Florida Produce Dist. Inc.* to support this view and references the Restatement (Second) of Torts, asserting that the owner is entitled to recover at least the rental value during the period of deprivation.
Mastec counters that the rationale behind the Florida automobile cases, which support rental value, does not apply to MCI as a large corporation. These cases were designed to ensure equitable access to loss of use damages for all plaintiffs, regardless of financial status. Mastec also argues that MCI misinterprets *Meakin*, asserting that rental value is merely an indication of loss of use, not equivalent to it, and that Florida law allows for multiple methods of measuring loss of use. Mastec posits that applying rental value in this case would provide MCI with an unjust benefit, noting the damaged cable's value is only $4,840, while MCI's repair cost was $23,000, compared to MCI's claim of over $8 million in value.
Furthermore, Mastec contends that MCI's claim for loss of use damages based on Bell South's substitute cable rental cost of approximately $868,000 is unjustified. Mastec argues that Florida courts have limited loss of use damages to the pre-injury value of the property since at least 1990, as established in *Badillo v. Hill*. MCI dismisses this limitation as outdated, claiming it arose in a context that is no longer relevant since the precedent set by *Wajay Bakery, Inc. v. Carolina Freight Carriers Corp.* in 1965 has nullified the underlying distinction. MCI maintains that even if the pre-injury limitation is valid, it should apply to both repair costs and loss of use damages, not exclusively to the latter.
The case presents unresolved issues in Florida tort law that are critical to the court's decision. The court intends to certify two specific questions to the Supreme Court of Florida for clarification:
1. Is a telecommunications service carrier entitled to damages for loss of use of a fiber-optic cable that was damaged by a defendant, given that the carrier had no evidence of lost revenue or damages during the cable's unavailability despite having the capacity to manage telecommunications traffic through its network?
2. If the carrier is entitled to loss of use damages, should the measure of those damages be limited to the pre-injury value of the damaged cable, or should it be based on the fair market rental value of a comparable replacement cable for the necessary repair duration?
The certification allows the Florida Supreme Court to restate or redefine the issues as it sees fit. The court will also send the case records and party briefs to the Florida Supreme Court to aid in answering these questions. This process is supported by Florida statutes and appellate rules, allowing federal courts to seek guidance on state law issues that are pivotal to their cases. A similar certification process was noted in a Fourth Circuit case involving comparable circumstances.
