Loss Of Use – New Law In Texas

Arlington attorneys handling claiming involving “loss of use” have long had to tell clients the following: “If your car is repairable, the insurance company will pay for the loss of the use of the car for as long as the car is reasonably in the shop being repaired. But if your car is a total loss, there is no recovery for the time you are without the use of the car.” This loss of use normally involves payment of the cost of a comparable rental car. However, if the car is used for business purposes, it also involves the income lost. An example might be a car used for delivery purposes.
A new case from the Texas Supreme Court has changed this law. The case is styled, J&D Towing, LLC v. American Alternative Insurance Corporation. This case will be told in two parts. Today, is the set-up and next will be the case law.
Nearly a century ago, a Texas attorney argued that the rule at issue in this case made it “cheaper to kill a mare in Texas than it is to cripple her.” No American Pharoah herself, (American Pharoah became the first horse since 1978 to sweep the Triple Crown) this one-eyed, underfed mare lived a simple life. One night, however, she was caught roaming the city streets in search of food and was placed in the city pound. Her owner failed to pay her board bill. Thus, the city marshall hired a man known as Panhandle Pete to put her out of her misery. As the court of appeals then put it, “when Panhandle Pete’s pistol popped, she petered, for which the pound-keeper paid Pete a pair of pesos.” Her owner protested her death and sued for damages, including $350 for the loss of her services in his occupation of hauling. The court rejected that claim, holding that although “damages occasioned by the loss of the use and hire of an animal are recoverable where the animal is injured,” “no such damages are recoverable for the total loss or death of an animal.” Rather, the measure of damages in the case of a wrongful killing of an animal is its market value, if it has one, and if not, then its actual or intrinsic value, with interest.” That rule, the owner’s attorney responded, makes it “cheaper to kill a mare in Texas than it is to cripple her.”
This case, before the Texas Supreme Court places a modern twist on that rule and addresses whether it should be cheaper to totally destroy a truck than it is to partially destroy it. J&D lost its only tow truck when a negligent motorist collided with the truck and rendered it a total loss. The question presented is simply put: In addition to recovering fair market value of the truck immediately before the accident, may J&D recover loss of use damages, such as lost profits?
AAIC says no and the Waco Court of Appeals agreed. Relying upon holding of other Texas courts of appeals and cases from this Supreme Court, they contend that Texas law distinguishes between partial destruction and total destruction of personal property, allowing loss of use damages for the former but not for the latter. J&D counters that this distinction belies common sense and is out of step with the majority trend in other jurisdictions permitting loss of use damages in total destruction cases.
The Texas Supreme Court reversed the Waco Court of Appeals and rendered judgment for J&D. See Tuesdays writing for the rest of the story.