Farmers Ins. Co. of Arizona v. R.B.L. Inv. Co., 2

• Citation: 138 Ariz. 562,675 P.2d 1381
• Decision Date: 15 December 1983
• Docket Number: No. 2,CA-CIV,2
• Parties: FARMERS INSURANCE COMPANY OF ARIZONA, Plaintiff/Appellee, v. R.B.L. INVESTMENT COMPANY, dba Bob Lewis Porsche-Audi, Defendant/Appellant. 4827.
• Court: Court of Appeals of Arizona

Page 1381

675 P.2d 1381

138 Ariz. 562

FARMERS INSURANCE COMPANY OF ARIZONA, Plaintiff/Appellee, v. R.B.L. INVESTMENT COMPANY, dba Bob Lewis Porsche-Audi, Defendant/Appellant.

No. 2 CA-CIV 4827.

Court of Appeals of Arizona Division 2.

Dec. 15, 1983.

Chandler, Tullar, Udall & Redhair by D.B. Udall and William J. Augustine, Tucson, for plaintiff/appellee.

Daniel A. Nicolini, Tucson, for defendant/appellant.

OPINION

HATHAWAY, Judge.

Whether the owner of a negligently damaged motor vehicle may be compensated for damages for loss in the fair market value above and beyond the cost of repair, and whether he may be compensated for loss of use of the motor vehicle during the period in which it is being repaired, are questions raised on this appeal. The facts are uncontested and the issues presented for review are solely questions of law which we may decide independently of the trial court's conclusions. See Associated Students v. Arizona Board of Regents, 120 Ariz. 100, 584 P.2d 564 (App.1978), cert. den. 440 U.S. 913, 99 S.Ct. 1226, 59 L.Ed.2d 462 (1979). We disagree with the trial court's conclusions limiting damages to the cost of repair and disallowing the cost of "flooring" during the period of repair.

On October 30, 1980, a new, unsold, 1980 Audi, available for sale from appellant's new car dealership, while being taken for a test drive, was involved in a collision with a vehicle insured by Farmers. Farmers admitted that the accident was the fault of its insured.

Repairs to the new Audi at the retail cost of $3,495.70, were required. Farmers offered to pay the repair costs, but appellant refused the offer on the basis that it would not fully compensate the loss. Farmers thereafter erroneously issued its draft to appellant for the sum of $9,460, which appellant accepted and cashed. Farmers asked for a refund of all funds in excess of its original $3,495.70 offer, and appellant counteroffered to return the amount in excess of the loss it claimed. Farmers refused and this suit ensued for return of the funds. This accounts for the unusual posture wherein Farmers, in seeking recovery of the overpayment, is litigating the damage and losses of the "defendant"/appellant.

The issue of the proper measure of appellant's damages was tried to the trial court on stipulated facts. The trial court's findings of facts include:

"... 9. That the dealer's wholesale factory cost of the car is $15,526.00.

10. That the amount of $3,122.63 was spent to fix the car after it was damaged in the accident.

11. That the dealership spent $1,971.91 in interest to the Valley National Bank paid on this particular car during the time it was in the shop being repaired.

12. That also, added to these numbers are normal, average gross profit in the sum of $889.00, and from that total they are deducting the amount of money for which the car was sold, $13,500.00, leaving a difference of $8,009.54 due from plaintiff."

The trial court held that the compensable damages were limited to the cost of repair. It is from this ruling that the appeal is taken. The judgment appealed from was based upon the trial court's minute entry of November 24, 1982, wherein the trial court stated:

"... 2. Present Arizona law provides for no award for decrease in value where the property can be repaired.

3. Present Arizona law makes no provision for collection of interest or floor-planning or delay in sale."

Appellant begins its loss-to-fair-market-value argument with a submission that an automobile that has been in a major accident is worth less than an identical automobile that has not been in an accident, suggesting that one need only examine their own biases as a consumer to acknowledge a disparity in the price they would be willing to pay for either vehicle. They further argue that where the choice is between an automobile that is "new" versus one that was new but was in an accident and is now repaired, the disparity is magnified.

The issue of the proper measure of damages for injury to personalty was discussed in Anderson v. Alabam Freight Lines, 64 Ariz. 313, 169 P.2d 865 (1946), where the Arizona Supreme Court stated:

" 'The measure of damages for injuries to personal property less than its destruction is the difference in the value of the property immediately before and immediately after the injuries.' [quoting from Mesa City v. Lesueur, 21 Ariz. 532, 540, 190 P. 573, 576.]

In addition to the costs of repairs and value of loss of use, the evidence in this case shows that the value of appellee's truck immediately before the accident was approximately $10,000, and immediately following the accident, in its damaged condition, was approximately $6,500, or a difference of $3,500. The judgment of the trial court was for the latter amount. There was, therefore, ample evidence to justify the judgment independently of the costs of repairs, loss of time, and similar items. The court also found that the cost of repairs would exceed $2,500, and that when made, the truck would have a value of $1,000 less than it had immediately preceding the accident." (Emphasis added) 64 Ariz. at 319, 169 P.2d at 869.

We find that Anderson v. Alabam Freight Lines, supra, deals with a factual situation where damages in the form of a loss of market value existed over and above the cost of repairs and is therefore controlling in the instant case. We find inapposite Reckart v. Avra Valley Air, Inc., 19 Ariz.App. 538, 509 P.2d 231 (1973); Downs v. Shouse, 18 Ariz.App. 225, 501 P.2d 401 (1972); Melvin v. Stephens, 10 Ariz.App. 357, 458 P.2d 977 (1969), all cited by appellee in support of its position. Those cases do not involve facts such as presented in the instant situation where the damaged party had actual, provable losses for market value and loss of use over and above the cost of repairs. We believe that the rule is clearly enunciated in the Restatement (Second) of Torts, § 928 (1977):

" § 928. Harm to Chattels. When one is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for

(a) the difference between the value of the chattel before the harm and the value after the harm or, at his election in an appropriate case, the reasonable cost of repair or restoration, with due allowance for any difference between the original value and the value after repairs, and

(b) the loss of use." (Emphasis added)

Other authority supporting damages for depreciation beyond the cost of repair includes Professor Dobbs, who writes:

"There seems no warrant at all for insisting that the owner content...