Loss Of Use – Another Opinion

Attorneys handling insurance cases will run into situations dealing with “loss of use” claims. The Waco Court of Appeals issued an opinion in June of 2014, that is worth reading. The style of the case is, American Alternative Insurance Corporation v. Robert Davis and J & D Towing, LLC. Here is relevant information from that case.
The crux of this case involves whether a chattel owner should be compensated for measurable loss-of-use damages suffered when the owner’s chattel is totally destroyed and the owner is unable to replace the chattel or obtain a substitute immediately. The dispute arises from an automobile accident between Robert Davis and Cassandra Brueland that occurred in Huntsville, Texas on December 29, 2011. At the time of the accident, Davis was driving a wrecker owned by his business, J & D. It is undisputed that Brueland was at fault for the accident and that the wrecker was rendered a total loss and unusable as a result of the accident. The only issue submitted to the jury pertained to J & D’s damages for the loss of use of its wrecker.
At trial, Davis testified that the wrecker in question was a 2002 Dodge 3500 with an 806 Vulcan wheel-lift unit on the rear. Davis stated that this was J & D’s only wrecker. Davis did not replace the wrecker until the second week of March 2012 because he claimed that he was financially unable to purchase a replacement wrecker.
Accordingly, J & D was unable to continue operations for a period of approximately four months.
In explaining the delay in replacing the wrecker, Davis noted that Brueland’s insurance company “low-balled” him on the value of the wrecker. After several rounds of negotiations, J & D finally settled its claim against Brueland’s insurance company for her policy limit of $25,000, which was more than the appraised value and purchase price of the wrecker. Afterwards, J & D made a claim for loss-of-use damages under its underinsured-motorist policy with AAIC, which had a policy limit of $85,000. AAIC denied J & D’s claim and ultimately cancelled the policy. This lawsuit followed.
With regard to damages, Davis stated that the primary income of J & D comes from “repossessions; city rotation, which is through HPD of the City of Huntsville; and my private property tow aways and private calls as well, but the primary would be rotations–rotations, repossessions and private properties.” As a result of the accident, Davis was forced to turn down dispatch calls from the Huntsville Police Department. Davis also noted that the accident prevented J & D from fulfilling contractual repossessions for Capital Asset and Recovery and other tows requested by private parties. After explaining his calculations, Davis asserted that J & D lost between $27,866.25 and $29,416.25 from the time of the accident until the wrecker was replaced in March 2012.
At the conclusion of the evidence, the jury returned a verdict in favor of J & D in the amount of $28,000. The trial court remitted the verdict to $22,500 and entered a final judgment on May 21, 2013. Subsequently, AAIC filed, among other things, a motion for judgment notwithstanding the verdict (hereinafter “JNOV”), arguing that the verdict violated Texas law regarding loss-of-use damages.
Texas law distinguishes between property that was damaged to the point of being totally destroyed and damaged property that can be repaired. For decades, Texas courts have held that, in a suit for damages for personal property that has been totally destroyed, the proper measure of damages is the fair market value of the property at the time it was destroyed. In other words, a chattel owner can recover only the market value of the property, not loss-of-use damages, in a total-loss case. On the other hand, when personal property, such as a vehicle, is damaged but repairable, the owner may recover the cost of repairs and damages for the loss of use of the vehicle.
In the instant case, it is undisputed that J & D’s wrecker was a total loss. In this case, the jury was not asked whether AAIC or Brueland’s insurer “unreasonably” delayed paying a claim. Instead, the jury in this case was asked a single question pertaining to loss-of-use damages. The court believed that the determination of unreasonable delay would be a fact question for the jury to answer–something that was not done in this case.
A complete reading of this case is necessary to understand the reasoning used to reach the outcome decided upon.