Pritchett v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 22 February 2002
• Citation: 834 So.2d 785
• Parties: Theodore PRITCHETT et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
• Court: Alabama Court of Civil Appeals

834 So.2d 785

Theodore PRITCHETT et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

2000850.

Court of Civil Appeals of Alabama.

February 22, 2002.

Certiorari Denied May 17, 2002

Alexander W. Jones, Jr., and Frank H. Tomlinson of Pritchard, McCall & Jones, L.L.C., Birmingham; Wyman O. Gilmore, Jr., Grove Hill; and Syliva Davidow, Anita Kawaja, and DéLisa Simmons of Fleming & Associates, L.L.P., Houston, Texas, "of counsel," for appellants.

Edward S. Sledge III, Walter T. Gilmer, Jr., and Todd P. Resavage of McDowell, Knight, Roedder & Sledge, L.L.C., Mobile, for appellee.

Alabama Supreme Court 1011129.

THOMPSON, Judge.

Theodore Pritchett (hereinafter "Pritchett"), as a putative class representative,¹ filed an action against State Farm Mutual Automobile Insurance Company (hereinafter "State Farm") alleging breach of contract. The facts that give rise to Pritchett's claim are as follows:

In August 1996, Pritchett was involved in a traffic accident that caused damage to his automobile. State Farm paid Pritchett $2,378.22 for the cost to repair the damage to the automobile. In his complaint in this action, Pritchett sought to recover from State Farm that amount representing the diminished value of his automobile, or the difference in the value of the automobile before the collision and the value of the automobile after the repairs made necessary by the collision. See Joiner v. Holland & Woodard Co., 652 So.2d 261, 262 (Ala.Civ.App.1994) (diminished value is the difference between the value of the property before and after the damage); Alabama Pool & Constr. Co. v. Rickard, 418 So.2d 149, 151 (Ala.Civ.App.1982) (the "diminished value" measure of damages is the difference in the property's market value before and after the alleged damage). Pritchett maintained in his complaint that loss attributable to diminished value is inherent in every instance in which an automobile is damaged in a collision.² State Farm denied that the terms of the applicable insurance policy required it to compensate its insured for any alleged inherent diminished value of a repaired automobile. We note that the parties did not on appeal present to this court the issue whether loss attributable to diminished value is inherent in any automobile that has been damaged and subsequently repaired; therefore, we do not address that issue.

The automobile insurance policy that Pritchett purchased from State Farm provides in relevant part³:

"COMPREHENSIVE-COVERAGE G....

"We will pay for loss to your car caused by collision but only for the amount of each such loss in excess of the deductible amount. If the collision is with another motor vehicle insured with us, you do not pay your deductible if it is $100 or less as we pay it.

"If your loss is payable as damages under the liability coverage of another policy issued by us, we will pay for such damage or loss only once, either under your policy or the liability coverage of the other policy.

"Collision—means your car upset or hit or was hit by a vehicle or other object.

". . . .

"Limit of Liability—Comprehensive and Collision Coverages

"The limit of our liability for loss to property or any part of it is the lower of:

"1. the actual cash value; or

"2. the cost of repair or replacement.

"Actual cash value is determined by the market value, age and condition at the time the loss occurred. Any deductible amount that applies is then subtracted.

"The cost of repair or replacement is based upon on of the following:

"1. the cost of repair or replacement agreed upon by you and us, or

"2. a competitive bid approved by us; or

"3. an estimate written based upon the prevailing competitive price. The prevailing competitive price means prices charged by a majority of the repair market in the area where the car is to be repaired as determined by a survey made by us. If you ask, we will identify some facilities that will perform the repairs at the prevailing competitive rate. We will include in the estimate parts sufficient to restore the vehicle to its pre-loss condition. You agree with us that such parts may include either parts furnished by the vehicle's manufacturer or parts from other sources including non-original equipment manufacturers.

"Any deductible amount that applies is then deducted.

"Settlement of Loss—Comprehensive and Collision Coverages

"We have the right to settle a loss with you or the owner of the property in one of the following ways:

"1. pay up to the actual cash value of the property at the time of the loss in exchange for the damaged property....;

"2. pay to:

"a. repair the damaged property or part, or

"b. replace the property or part.

"If the repair or replacement results in betterment, you must pay for the amount of the betterment, or

"3. return the stolen property and pay for any damage due to the theft."

(Emphasis omitted.)

Pritchett moved for a partial summary judgment on the issue of State Farm's liability. The trial court denied that motion. State Farm then moved for a summary judgment. The trial court entered a summary judgment in favor of State Farm. Pritchett appealed to the supreme court, which transferred the appeal to this court, pursuant to § 12-2-7(6), Ala.Code 1975.

A motion for a summary judgment is properly granted where no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law. Rule 56, Ala. R. Civ. P.; Bussey v. John Deere Co., 531 So.2d 860 (Ala.1988). After the moving party makes a prima facie showing that there is no genuine issue of material fact, the burden then shifts to the nonmoving party to demonstrate the existence of a genuine issue of material fact. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794 (Ala.1989). To carry that burden, the nonmoving party is required to present substantial evidence, i.e., "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). In reviewing a summary judgment, this court must view the evidence in a light most favorable to the nonmoving party, and must resolve all reasonable doubts concerning the existence of a genuine issue of material fact in favor of the nonmovant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).

In its summary judgment in favor of State Farm, the trial court determined that the above-quoted policy language unambiguously provided that Pritchett could recover only the cost of the repair to his damaged automobile and that the policy did not provide coverage for any alleged loss in addition to the cost of those repairs. Thus, the trial court found that the policy language precluded Pritchett's recovery of any compensation from State Farm for the alleged diminished value of his automobile. In support of its judgment, the trial court cited as persuasive authority cases from other jurisdictions that hold that an insured may not recover from his insurer an amount representing the diminished value of an automobile that has been repaired after having been damaged.

In Alabama, diminished value has been recognized as a measure of damages when an action is brought by a third party. See King Motor Co. v. Wilson, 612 So.2d 1153 (Ala.1992) (the plaintiff in a fraud action could recover the amount representing the diminished value of the automobile where experts agreed that the automobile was worth less than an automobile that had not sustained damage and had been subsequently repaired); Coffee County Comm'n v. Smith, 480 So.2d 1194 (Ala.1985) (in an action against the county for property damage, the proper measure of damages was the difference in the value of the property before and after the damage); Robbins v. Voigt, 280 Ala. 207, 191 So.2d 212 (1966) (where the plaintiffs' automobile was damaged in a collision with the defendants' automobile, the correct measure of damages was the difference in the fair market value of the automobile immediately before and after the damage). Those third-party cases are governed by the tort principle that damages should compensate the injured party for his or her loss or injury and should make the injured party whole. Ex parte Moebes, 709 So.2d 477, 478 (Ala.1997) ("Compensatory damages are designed to make the plaintiff whole by reimbursing him or her for the loss or harm suffered.").

This case, however, involves a first-party breach-of-contract claim in which the plaintiff sought damages under the collision coverage of his insurance policy with State Farm. Therefore, contract principles govern the award of any damages in this action, and the language of the insurance policy determines the measure of damages to be recovered.

In his brief on appeal, Pritchett maintains that whether an insured may recover from his insurer for diminished value under an automobile insurance policy is an issue of first impression in Alabama. State Farm, however, contends that Alabama caselaw establishes that an insured may not recover under his insurance policy for the diminished value of his repaired automobile. In support of its position, State Farm cites Home Insurance Co. of New York v. Tumlin, 241 Ala. 356, 2 So.2d 435 (1941).

In Home Insurance Co. of New York v. Tumlin, supra, Tumlin sought to recover the cost of repairing his wrecked automobile from his insurer. Tumlin had purchased the automobile on credit, and the creditor was also named as an insured on the insurance policy under which Tumlin sought to collect damages. The trial court entered a judgment on a jury verdict in Tumlin's favor. The insurer appealed, arguing that the creditor should have been a party to the action, and that Tumlin was not entitled to recover damages without proving that he had discharged the indebtedness to the creditor, thereby obtaining a full interest in the automobile. Our supreme court reversed, holding that the trial court had erred in...