Beware - New Case Bolsters Diminished Value Claims
By: Jennifer
R. Erickson
The arguments and strategies for
defending diminished value claims will likely shift in the upcoming
months due to a recent Appellate Court ruling. For years, the
only substantive case discussing diminished value ("DV") claims in
Arizona was
Farmers v. RBL Inv. Co. The Court in
RBL, relying on the Restatement, held that a DV claim is
compensable in Arizona but that the Plaintiff needed to show an
actual and provable loss. Frequently the defense argued that
there can be no actual or provable DV claim where the damaged
vehicle was not sold or traded. After all, if the Plaintiff
still owned the vehicle and was still using it, how could the
Plaintiff have experienced a loss in value?
This was the argument made by the
Defendant in Oliver v.
Henry, a case recently decided by Division One of the
Arizona Court of Appeals. In Oliver, the Defendant
admitted liability for an automobile accident, and his insurer paid
the Plaintiff for the cost of repairs. Oliver then sued Henry
seeking the diminished value of his vehicle, a 2008 Jeep Wrangler
he had purchased two months prior to the accident. He
presented expert testimony as to the loss in value of his vehicle
even though he had not sold it; he continued to drive it and in
fact, he testified that he had no immediate plans to get rid of the
vehicle.
Based on long standing precedent and
strategy, the defense argued that the claim for DV was not ripe
since Mr. Oliver still owned the car. Moreover, there was no
evidence that Mr. Henry had tried to sell his vehicle but could not
because of the damages to the Jeep from the accident. Any
loss of value, according to the defense, was purely
speculative.
The Court disagreed and held: "Oliver
was not required to sell, exchange or otherwise dispose of his
damaged and subsequently repaired Jeep Wrangler in order to
demonstrate an actual and provable loss in value; instead, the loss
could be established through other competent means, such as expert
appraisal of the pre-loss and post-repair values."
It is our expectation that you will see
a significant increase in DV claims in the coming months. No
longer will you be able to dispute the ripeness of these
claims. Instead, the dispute will be entirely over value, and
this will be through expert testimony. It will be important
that you work with an expert that not only understands vehicular
valuation but also is experienced and effective at
testifying. If you need assistance looking an expert to
evaluate and analyze a DV claim, feel free to contact us.
About the author: Jennifer Erickson is a partner
at the Phoenix law firm of Jaburg Wilk. She heads the
Insurance Defense department and has represented both insureds and
insurance companies for more than 18 years. Jen can assist
you with finding experts to support the analysis of DV
claims. She can be reached at 602.248.1061 or jre@jaburgwilk.com.
This article is not intended to provide legal advice and
only relates to Arizona law. It does not consider the scope
of laws in states other than Arizona. Always consult an
attorney for legal advice for your particular situation.
3200 North Central Avenue
. Phoenix . Arizona