Loss Of Use

Dallas County insurance lawyers will run into situations where a claim for “loss of use” as it relates to a vehicle will need to be made. An opinion that is a good case to look for guidance is from the Austin Court of Appeals in 1997, and is styled, “Mondragon v. Austin.” Here is some of the relevant information.
The facts of this case 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 the 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 damage 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 cause to the judge on January 18, 1996. As of the date of trial, 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.
After the case was submitted, the judge wrote a letter to the parties in which she opined that the car was not a total loss, and that Austin was therefore entitled to recover for loss of use of the car. According to the letter, the judge determined that, at the stipulated daily rental car rate, Austin suffered $8,020 in damages by losing the use of the car between the date of the accident and September 20, 1994, two weeks after the repair estimate was obtained. The judge then rendered judgment for Austin in the amount of $10,772.70, plus $1,716.43 in prejudgment interest, plus costs.
In Texas, a person whose car has been totally destroyed as a result of a tort 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.
Because Mondragon stipulated that the cost of repairs was $2,752.70, this Court had to determine whether to uphold the remaining $8,020 of the award based in part on a loss of use theory. One way a plaintiff may prove loss of use damages is to establish the reasonable rental value of a substitute car. The parties in this case stipulated that the reasonable rental value of a substitute car was $20 a day. They only dispute the length of time over which the damages may be computed.
Mondragon chose to drive while intoxicated. He and his insurance company then chose not to pay Austin’s claim. As a consequence of these choices, Austin’s damages totaled more than three times the value of his car. In denying the claim for more than a year, Mondragon and his insurance company took a chance of being liable for extraordinarily high loss of use damages. They now suffer the consequences of the choices they made and the chances they took.
Some may argue this opinion will encourage future plaintiffs to delay repair intentionally to increase loss of use damages. There is no evidence in this case that Austin intentionally delayed repairing the car just to receive a windfall. All the evidence suggests Austin had no means to repair the car or otherwise mitigate his damages, and he promptly gave Mondragon a chance to pay the claim. Furthermore, Mondragon does not argue and the record does not support a conclusion that the car was a total loss. Moreover, Mondragon stipulated that the appropriate measure of loss of use damages was the value of a car rented on a daily basis. The holding is specific to these facts.
Thus, the trial court ruling was upheld.

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