Associate Attorney
In Lam v. Modern Tampa Bay Homes, Inc. (Fla. 2d DCA 2026), the Second District Court of Appeal addressed a question that comes up frequently: when a party wins on liability but recovers only a fraction of the damages it sought, is it still the “prevailing party” for purposes of attorney’s fees?
Tom and Deborah Murphy Lam entered into a construction contract with Modern Tampa Bay Homes. The relationship deteriorated, and the Lams brought claims for breach of contract, among other theories. Modern Homes fired back with counterclaims for breach of contract and breach of the implied covenant of good faith and fair dealing. Under the contract’s arbitration clause, the breach of contract claims went to an arbitration panel, which ruled clearly in the Lams’ favor on liability. The panel denied all of Modern Homes’ counterclaims. The Lams were awarded $139,404.69 in actual damages, but that was well short of the $708,631.54 they had originally sought, which included consequential damages the contract expressly prohibited. The panel left the question of prevailing party and attorneys’ fees to the trial court.
The trial court denied both parties’ motions to be designated the prevailing party. As to the Lams, the court zeroed in on the damages gap, as the Lams recovered only about 18% of what they sought. The court ultimately concluded that case law did not support a prevailing party finding under those circumstances.
The Second DCA reversed.
The court applied the Florida Supreme Court’s test from Moritz v. Hoyt Enterprises, Inc. 604 So. 2d 807, 810 (Fla. 1992): the prevailing party is the one who succeeds on the significant issues in the litigation and achieves some of the benefit the parties sought in bringing suit. Under that standard, the trial court’s focus on the damages percentage was misplaced.
The court explained that in a breach of contract case where both sides accused the other of breaching, the significant issue was liability, not the dollar amount either party demanded. The Lams won entirely on liability. Modern Homes lost on its own counterclaims. The reason the Lams recovered less than they sought had nothing to do with a finding against them; it was because the contract itself barred recovery of consequential damages. That contractual limitation did not diminish their victory on the merits. A party can even be designated the prevailing party when it recovers no damages at all.
Takeaway: Prevailing party status in a breach of contract case is determined by who won on the merits, not by how much money they walked away with. If your client succeeds on liability, the fact that a contract clause capped their recovery does not hand the victory to the other side. Push back hard when trial courts conflate damages limitations with a loss on the merits.
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