Loss Of Use / Rental

If you live in Grand Prairie, Arlington, Mansfield, Dallas, Fort Worth, Burleson, Southlake, Hurst, Euless, Bedford, Lake Worth, or anywhere else in Texas, you might wonder what happens if your car is involved in a wreck and it is the other person who is at fault, then the other person’s insurance refuses to fix the car. What happens?
That is kind of what happened in the 1997 case, Cirilo Mondragon v. Morris Austin. This case was decided by the Austin, Court of Appeals.
To begin with, this case is not that uncommon. When something like this happens, it would be prudent to seek the advice of an experienced Insurance Law Attorney.
Here are the facts of the case and they are undisputed. In mid-1993, Austin borrowed money and purchased a car for his daughter to drive while she was away at college. About two months later, Mondragon, driving drunk and backwards down the road, collided with Austin’s car while Austin’s daughter was driving it. As a result of this accident, the car could not be driven. Austin had the car towed to his home.
Shortly after the accident, Austin filed a claim with Mondragon’s insurance company. The company chose to deny the claim despite the circumstances surrounding the accident. Because Austin had no money and no collision insurance, he had no way to repair the car and did not obtain an estimate of the damages until September 1994, over one year after the accident.
As a consequence of Mondragon’s choices, Austin had to continue making the payments on the car, send additional money to his daughter for transportation at college, and travel six hundred miles each way to transport her back and forth on holidays.
In March 1995, Austin sued Mondragon for the cost of repairing the car, the value of his loss of use of the car, and exemplary damages. At trial, the defendant agreed to stipulate that: (1) the collision was Mondragon’s fault; (2) the fair market value of the car at the time of the collision was $3,400; (3) the cost of repairing the car was $2,752.70; (4) the daily rental value for a replacement car was $20; and (5) any exemplary damages awarded Austin would not exceed $5,000.
The parties tried the case to the Judge on January 18, 1996. As of the trial date, Austin had not repaired the car because, according to Austin, he did not have the money to do so. Mondragon did not offer any evidence to the contrary.
The Judge awarded Austin $8,020 in damages for loss of use of the car and $2,752.70 for repairs, plus interest and court costs.
Mondragon appealed for various reasons but the focus here is on the loss of use.
In Texas, a person whose car has been totally destroyed as a result of a tort (car wreck) may recover only the value of the car, while a person whose car is repairable may also recover for loss of use of the car. This was stated by the Tyler Court of Appeals in 1994. This was also addressed by the Texas Court of Appeals in a 1950 opinion.
One way a plaintiff in a lawsuit may prove loss of use damages is to establish the reasonable rental value of a substitute car. Here, the parties stipulated to $20 per day. The only dispute was the length of time over which the damages may be computed. Austin contended he should be eligible to recover loss of use damages for the entire period of time he was deprived the use of his car. Mondragon, on the other hand, argued the period of time should be limited to that reasonably necessary to repair the car. He argued the car could have been repaired in two weeks, and thus he is not liable for damages that accrued in excess of two weeks.
In an earlier case, the Texas Supreme Court, discussed the appropriate method by which to measure loss of use damages for deprivation of the use of a repairable car. The court noted the “period of compensatory loss of use will be the amount of time the plaintiff was deprived of the loss of the use of the automobile.” The Court emphasized that “the thing to be kept in view is that the party shall be compensated for the injury done.” This language is requiring courts to consider the particular circumstances of the plaintiff and the facts of each case in assessing loss of use damages.
Here, the Court reasoned that if they were to limit Austin’s loss of use award to two weeks, they would be penalizing him for his lack of financial resources, denying him recovery of the damages he suffered because of Mondragon’s negligent act, and allowing the insurance company to reap the benefit of its refusal to pay the meritorious claim. They stated, “The law does not permit or require such a result.”
There were other arguements and points in this case related to the loss of use and how that number should be computed. Another source of information on compensation for loss of use can be found with the Texas Department of Insurance.