Texas Supreme Court Holds that Loss-of-Use Damages Are Available in Cases Involving Both Partial and Total Destruction of Personal Property – J&D Towing, LLC v. American Alternative Insurance Corporation

When the negligence of a person, business, or governmental entity results in legal harm to someone, the injured party is entitled to damages such as payment of medical expenses, reimbursement for lost wages, and compensation for pain and suffering. In some cases, property damage is also a possible element of damages.

In a recent case, the Texas Supreme Court was called upon to review another type of damages related to property damage, namely, loss-of-use damages.

The Facts of the Case

The plaintiff in the case of J&D Towing, LLC v. American Alternative Insurance Corporation was a tow truck owner that lost its only tow truck when a motorist negligently caused a collision that rendered it a total loss. The parties disagreed as to the value of the truck, and it took several weeks for a settlement to be reached, a replacement truck to be purchased, and the plaintiff’s business to resume. After the negligent motorist’s insurer finally paid out policy limits to the tow truck owner, the owner sought further payment from its own underinsured motorist (UM) carrier on the basis that it had not been fully compensated for all of its damages stemming from the accident because it had not received any reimbursement for its lost profits following the accident, only for the loss of the truck itself.

At trial, the UM carrier argued that Texas law does not permit loss-of-use damages in total destruction cases, but the trial court disagreed and entered judgment on a jury verdict in the truck owner’s favor. The court of appeals reversed, holding that loss-of-use damages are not available in total destruction cases.

The Decision of the Texas Supreme Court

The court reversed the intermediate court’s decision and rendered judgment for the tow truck owner. The court began its analysis with a reference to a century-old case involving a “one-eyed, underfed mare” whose owner filed suit after the mare was placed in the city pound and then shot to “put her out of her misery.” The owner sought payment for the loss of the mare’s services in his occupation of hauling. The court rejected his claim, holding that loss-of-use damages were available only when an animal was injured, not when there was a total loss or death of the animal.

After acknowledging that the case made it “cheaper to kill a mare in Texas than it is to cripple her,” the court compared the issue to the one at hand, in which it appeared cheaper to totally destroy a tow truck than to partially destroy it. Finding that the rule in the old case was no longer applicable, the court found that the tow truck owner was entitled both to the fair market value of the truck immediately before the accident and also to loss-of-use damages such as lost profits. According to the court, there was no longer any reason to distinguish between the partial and total destruction of personal property when deciding whether to allow loss-of-use damages. Such a rule belied common sense and was out of step with the majority rule in other jurisdictions.

To Get Advice About Your Texas Car Accident

If you or a family member has been hurt in a car accident, truck wreck, or motorcycle crash, experienced Texas auto accident attorney Earl Drott can help. To schedule an appointment, call us at (903) 531-9300 and ask for a free, confidential case evaluation. We serve clients throughout east Texas, including in Tyler and the surrounding area.

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