How Do I Settle My Car Damage With the Insurance Company?

[occurrence]  herein, Art Long’s vehicle was made inoperable and the cost of repairing Art  Long’s vehicle exceeded its market value of $1300.00 and Art Long is entitled  to judgment for its October 17, 1978 value of $1300.00 with interest at the  rate of seven percent from October 19, 1978 through date of filing this  Petition and thereafter at the maximum legal rate, allowed for interest.

In addition, defendants  asserted an affirmative defense, alleging that the extent of their obligation  was to pay plaintiff $1300 with interest from the date of the accident.

Subsequently defendants  offered to confess judgment for $1300 with interest at seven percent from the  date of the accident to December 31, 1980, and at ten percent thereafter.  Defendants also moved for adjudication of law points, alleging unavailability  of loss of use damages when a motor vehicle has been totally destroyed.   Plaintiff did not accept the confession of judgment, and the trial court ruled  in defendants’ favor on the motion to adjudicate law points.

Defendants next filed a  motion for summary judgment, alleging that McAllister and the seed company owed  plaintiff only $1300 plus interest at ten percent per annum from the date of  filing the petition under count I. That amount was deposited with the clerk.   I.M.T. asked for judgment on count II of the petition on the ground it failed  to state a claim on which relief could be granted. The trial court subsequently  sustained the motion and entered judgment for plaintiff on count I for the  $1314.25 deposited with the clerk, and for I.M.T. on count II. As authorized by  Iowa R.Civ.P. 237(c), plaintiff filed a rule 179(b) motion challenging the  court’s failure to award prejudgment interest on count I. The court refused to  change the judgment, and this appeal followed.

I. Prejudgment interest. The question of plaintiff’s entitlement to prejudgment interest on the amount  representing the reasonable market value of his automobile at the time of the accident is controlled by the admission in defendants’ answer. Plaintiff  alleged and defendants admitted plaintiff’s entitlement to interest on the  $1300 award at the rate of seven percent from the date of the accident and at  the maximum legal rate from the date of filing of the petition. When a fact  alleged in a pleading is admitted, the fact is no longer an issue. Smith v.  Bitter, 319 N.W.2d 196, 199 (Iowa 1982) (filed separately this date); Cowles  Communications, Inc. v. Board of Review of Polk County, 266 N.W.2d 626, 631) Iowa 1978); Welter v. Heer, 181 N.W.2d 134, 136 (Iowa 1970). Even though  defendants took a different position in resisting plaintiff’s rule 179(b)  motion, they did not seek to amend their answer.

We have no occasion to  decide whether plaintiff would have been entitled to prejudgment interest in  any event under the principle in Vorthman v. Keith E. Myers Enterprises, 296 N.W.2d 772, 778 (Iowa 1980). Nor do we have occasion to decide the effect of  section 535.3, The Code. Because the entitlement to interest was admitted, the  court erred in refusing to award plaintiff prejudgment interest on the terms  alleged.

II. Loss of use damages. In  denying damages for loss of use of the destroyed

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automobile, the trial court followed  existing precedent. See, e.g., Aetna Casualty and Surety Co. v. Insurance  Department of Iowa, 299 N.W.2d 484, 485 (Iowa 1980):

(1) When the automobile is  totally destroyed, the measure of damages is its reasonable market value  immediately before its destruction.

(2) Where the injury to the  car can be repaired, so that, when repaired, it will be in as good condition as  it was in before the injury, then the measure of damages is the reasonable  value of the use of the car while being repaired, with ordinary diligence, not
exceeding the value of the car before the injury.

(3) When the car cannot, by  repair, be placed in as good condition as it was in before the injury, then the  measure of damages is the difference between its reasonable market value immediately before and immediately after the accident.

These rules were first  distilled in Langham v. Chicago, R.I. & P. Ry., 201 Iowa 897, 901, 208 N.W.  356, 358 (1925). The court expressly held that loss of use damages are not
allowed under the first and third rules in Kohl v. Arp, 236 Iowa 31, 33-34, 17  N.W.2d 824, 826 (1945).

The rule denying loss of use  damages in these situations has not been specifically discussed in the cases.   Because the rule has been challenged in the present case, we must determine its  continued viability. We do so against the background “that the principle underlying allowance of damages is that of compensation, the ultimate purpose  being to place the injured party in as favorable a position as though no wrong  had been committed.” Dealers Hobby, Inc. v. Mary Ann Linn Realty Co., 255  N.W.2d 131, 134 (Iowa 1977).

Inherent in our present rules governing damages to motor vehicles is the concept that the market value  of the vehicle is the ceiling on recovery whether the vehicle can be repaired or must be replaced. In some cases the owner will be fully compensated despite  that limitation. Even when the vehicle is destroyed and delay occurs before  compensation is received, interest on the market value of the vehicle from the  date of the accident theoretically pays the owner for the delay. The same is  true when the vehicle is not destroyed but cannot be restored to its prior  condition and the owner receives interest on its depreciated value. Moreover,  when the vehicle can be restored by repair to its prior condition, the owner is  not only entitled to compensation for the reasonable cost of repair but for  reasonable loss of use damages. Although market value is nevertheless a ceiling on recovery even in this situation, full compensation is possible when the  cumulated damages do not exceed the limitation.

In other cases, however, the  present rules plainly do not permit full compensation. Loss of use damages will  be incurred as readily when a vehicle is totally destroyed or when it cannot be  restored by repair to its prior condition as when the vehicle can be restored
by repair. Just as loss of use damages are necessary for full compensation when  the vehicle can be restored to its prior condition, they are warranted when the  vehicle is destroyed or cannot be so restored. No logical basis exists for  cutting them off when the total reaches the vehicle’s market value before the  injury.

The origin of the market value  limitation lies in history rather than logic. Damages for destruction of  chattels were based on analogy to conversion. The reasonable market value of the chattel was viewed as adequate compensation under this concept in the common law action of trover. The rigidity of the analogy obscured any  distinction between destruction of chattels generally and destruction of  chattels of such utility that the owners incurred loss of use expense. Perhaps  this distinction became important only with the advent of the motor vehicle and  the practice of motor vehicle leasing and rental.

The historical basis and  usual arguments for denying loss of use damages are addressed in D. Dobbs,  Remedies § 5.11 at 384-85 (1973) (footnotes omitted):

Loss of use claims are most  commonly asserted for a period of time when the chattel is being repaired, but  sometimes

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the chattel is destroyed and is not  repairable. In such cases, loss of use claims are sometimes asserted for the  period required to replace the chattel. A number of courts have refused to  permit loss of use awards in cases of total destruction, and have limited
recovery in such cases to the value of the article. Destruction, of course, was  closely analogous to a conversion, where the measure of damages was the value  of the chattel at the time of conversion, and it was natural enough to import  the conversion measure into the destruction situation. There was probably some  thought that the market value of the chattel–which reflected the right to use  it gainfully–plus interest for the time the owner was deprived of it, actually  furnished full compensation. Another argument made against granting loss of use  where there was total destruction sounds rather strange in modern ears. The  authors of Sedgwick on Damages argued that when compensation for the whole value of the property destroyed is sought, “it is upon the theory that the  plaintiff’s entire interest in the property ceased at the time of the injury,  and was replaced by a right to have the value of the property in money. Since  therefore, the plaintiff no longer has title to the property he can no longer  claim that he might make a future gain from it…..” Such an argument  probably would not be accepted, or even thought of, today. It is a conceptual argument  that does not interest itself in whether the owner has actually lost something of value beyond the market value of his property; it interests itself only in a  legal concept–passage of title–that is not a part of the real world of facts  and has no significant relation to important facts of actual loss. A third  argument against granting loss of use recovery where a chattel is totally  destroyed is that to grant such recoveries opens the door to speculation. This  argument, if acceptable, would seem to apply equally to any loss of use claim,  whether there was destruction or merely damage. But the argument does not seem acceptable, because there is no essential reason why loss of use claims must be speculative. There is nothing speculative about the cost of a rental car for a  specified time while the damaged vehicle is being replaced. If loss of use  leads also to loss of profits, they are speculative as much or as little as  other claims of lost profits and the question of speculation becomes in the end  a question whether the evidence of loss is sufficient in each case.

The more recent cases that  have given serious consideration to the rule limiting recovery in cases of  destruction to the value of the chattel have rejected the rule, and have  instead allowed loss of use claims in destruction cases just as in repair  cases. But of course the relevant period of time in destruction cases is only  the time reasonably required to obtain a replacement.

A noticeable trend toward  allowing loss of use damages in destruction cases has emerged since World War  II. See Annot., Recovery for Loss of Use of Motor Vehicle Damaged or Destroyed,  18 A.L.R.3d 497, 519 n.12 (1968).

The fallacy in the market  value ceiling upon recovery in a destruction case was pinpointed in Bartlett v.  Garrett, 130 N.J.Super. 193, 196, 325 A.2d 866, 867 (1974):

When an automobile is  damaged through the negligence of another, temporary loss of the use of such  vehicle pending repair or replacement is a reasonably foreseeable consequence of the defendant’s tortious conduct. Compensation for the temporary loss of use  is directed at plaintiff’s economic loss, the amount of money plaintiff had to  pay for rental of a car. This is an injury different in kind from property damage,  the amount of money necessary to repair or replace the damaged vehicle. A  plaintiff in a total destruction case deprived of his reasonable loss-of-use  expenses has simply not been made whole. (emphasis in original).

The same reasoning is  applicable in a repair situation. See Kopischke v. Chicago, St. P., M. & O.  Ry., 230 Minn. 23, 31-32, 40 N.W.2d 834, 839 (1950).

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Loss of use damages are now  permitted under various rules even in destruction cases in a growing number of  other jurisdictions. See, e.g., Dennis v. Ford Motor Co., 332 F.Supp. 901  (D.C.Pa.1971), aff’d, 471 F.2d 733 (3d Cir. 1973) (applying Pennsylvania law);  Bettis v. Roache, 296 F.Supp. 947 (D.C.Canal Zone 1969); Buchanan v. Leonard,  127 F.Supp. 120 (D.C.Col.1954) (applying Colorado law); Stevens v.  Mid-Continent Investment Co. Inc., 257 Ark. 439, 517 S.W.2d 208 (1974);  Reynolds v. Bank of America National Trust & Savings Assn., 53 Cal.2d 49,  345 P.2d 926 (1959); Gamble v. Smith, 386 A.2d 692 (D.C.App.1978); Wajay Bakery,  Inc. v. Carolina Freight Carriers Corp., 177 So.2d 544 (Fla.App.1965); New York  Central Railroad Company v. Churchill, 140 Ind.App. 426, 218 N.E.2d 372 (1966);  Peterson v. Bachar, 193 Kan. 161, 392 P.2d 853 (1964); Daniel v. Kerby, 420  S.W.2d 393 (Ky.1967); Washington v. Lake City Beverage, Inc., 352 So.2d 717 (La.App.1977), cert. denied, 354 So.2d 1050 (La.1978); Weishaar v. Canestrale,  241 Md. 676, 217 A.2d 525 (1966); Wenz v. Leon, 90 Misc.2d 85, 393 N.Y.S.2d 309  (1977); Roberts v. Pilot Freight Carriers, Inc., 273 N.C. 600, 160 S.E.2d 712  (1968); Park v. Moorman Mfg. Co., 121 Utah 339, 241 P.2d 914 (1952); Nashban  Barrel & Container Co. v. G. G. Parsons Trucking Co., 49 Wis.2d 591, 182  N.W.2d 448 (1971). This view is also reflected in the Restatement. See  Restatement (Second) of Torts § 927 (1979).

We believe our motor vehicle  damage rules should be modified to permit full compensation including loss of  use damages. The new rules shall apply to this case, any pending case in which  error has been preserved on the issue, and all cases tried after the date of  filing this opinion. As modified, the rules are as follows:

(1) When the motor vehicle  is totally destroyed or the reasonable cost of repair exceeds the difference in  reasonable market value before and after the injury, the measure of damages is  the lost market value plus the reasonable value of the use of the vehicle for
the time reasonably required to obtain a replacement.

(2) When the injury to the  motor vehicle can be repaired so that, when repaired, it will be in as good  condition as it was in before the injury, and the cost of repair does not  exceed the difference in market value of the vehicle before and after the  injury, then the measure of damages is the reasonable cost of repair plus the  reasonable value of the use of the vehicle for the time reasonably required to  complete its repair.

(3) When the motor vehicle  cannot by repair be placed in as good condition as it was in before the injury,  then the measure of damages is the difference between its reasonable market  value before and after the injury, plus the reasonable value of the use of the vehicle for the time reasonably required to repair or replace it.

In the present case,  plaintiff alleged loss of use damages but did not get an opportunity to prove  them because of the adjudication of law points denying their availability. We  reverse the adjudication and order that plaintiff be accorded a trial on the  issue upon remand.

III. The bad faith claim.
Plaintiff asks us to recognize a new tort that would permit a third party to  recover against an insurer for the insurer’s bad faith toward the third party  in failing to settle a liability claim against the insured. This situation is  to be distinguished from third party excess judgment cases and first party  actions. In each of those situations the relevant duty of good faith and fair  dealing arises from the insurance contract and runs from the insurer to the  insured. In an excess judgment case, the issue is whether the insurer was  guilty of bad faith toward the insured in failing to settle the injured party’s  claim within policy limits. See, e.g., Kooyman v. Farm Bureau Insurance Co.,  315 N.W.2d 30 (Iowa 1982). In a first party action, the issue is whether the  insurer was guilty of bad faith in failing to pay the insured’s own claim. See,  e.g., Noble v. National American Life Insurance Co., 128 Ariz. 188, 624 P.2d 866 (1981). We have not recognized the first party tort in Iowa. See M-Z Enterprises,

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Inc. v. Hawkeye-Security Insurance  Company, 318 N.W.2d 408, 415 (Iowa 1982). We have recognized a first party tort  for an insurer’s intentional infliction of severe emotional distress on its  insured. See Amsden v. Grinnell Mutual Reinsurance Co., 203 N.W.2d 252 (Iowa  1972).

A third party is given  standing to bring an excess judgment suit by the direct action statute, section  516.1, The Code. See Trask v. Iowa Kemper Mutual Insurance Co., 248 N.W.2d 97,  98 (Iowa 1976). Because that statute gives the third party only the right
against the insurer that the insured would have if the insured paid the  judgment, it has no application in the present case. Moreover, we have no  occasion to decide whether a third party acquires a right to bring an action of  the present kind under Iowa’s insurance trade practices statute, chapter 507B,  The Code. Plaintiff urged this ground for the first time in his reply brief in  this court, and thus the claim comes much too late.

The arguments for and  against recognizing the right of a tort victim to bring a common law action  against the tortfeasor’s insurer for bad faith in settling the victim’s claim
are carefully considered in the majority and concurring opinions in Kranzush v.  Badger State Mutual Casualty Company, 103 Wis.2d 56, 307 N.W.2d 256 (1981).  Insofar as relevant here, the court considered and rejected two possible bases  for the action. One is the insurance contract, and the other is in tort  concepts generally.

The contract basis would  recognize the victim as a third party beneficiary of the insurance contract. We  have reviewed principles relating to third party beneficiaries in Khabbaz v. Swartz, 319 N.W.2d 279, 284 (Iowa 1982), filed separately this date. The  determinative question is “whether the contracting parties intended that a  third person should receive a benefit which might be enforced in the  courts.” Bailey v. Iowa Beef Processors, Inc., 213 N.W.2d 642, 645 (Iowa  1973), cert. denied, 419 U.S. 830, 95 S.Ct. 52, 42 L.Ed.2d 55 (1974). The insurance  contract is not part of the record in the present case. Therefore we have no  basis for determining that it contains an express or implied intention to make the victim a policy beneficiary.

Plaintiff relies on a  statement in R. Keeton, Basic Text on Insurance Law, section 4.8(a) at 232-33  (1971), recognizing that victims can be and sometimes are third party  beneficiaries of liability insurance policies. Professor Keeton does not  suggest this relationship exists under the ordinary liability policy, nor are  we aware of any decision holding that it does. Because plaintiff relies only on  the fact that he will benefit if the contract is carried out in accordance with  its terms, he has alleged only a basis for finding he is an incidental  beneficiary. See Khabbaz, 319 N.W.2d at 285. We refuse to extend the third  party beneficiary concept to the limits advocated by plaintiff.

We also decline to recognize  a duty of the insurer to the victim under general tort concepts. The insurer  has a fiduciary duty to the insured but an adversary relationship with the  victim. The effect of the policy is to align the insurer’s interests with those
of the insured. In meeting its duty to the insured, the insurer must give as  much consideration to the insured’s interests as it does to its own. It has no  such relationship with a third party. Instead the insurer stands in the shoes  of the insured in dealing with the victim. Because the insured has a right to  require liability to be proven as a predicate for payment of the loss, the  victim cannot compel the insured to negotiate and settle the loss beforehand.  No basis exists for giving the victim a greater right when negotiating with the  tortfeasor’s insurer than exists when the victim negotiates with the tortfeasor  directly. See Kranzush, 307 N.W.2d at 265. In either event, the victim has a  remedy for his injury through a tort action against the insured. That remedy  will permit compensation to be ordered when it is justified.

We are aware of no  jurisdiction that has recognized the kind of third party action advocated by  plaintiff in this case. The

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absence of authority was noted in  Uebelacker v. Horace Mann Insurance Company, 500 F.Supp. 180, 183  (E.D.Wis.1980). The action has been rejected in Kranzush, Linscott v. State  Farm Mutual Automobile Insurance Co., 368 A.2d 1161 (Me.1977), and Bowe v. Eaton, 17 Wash.App. 840, 565 P.2d 826 (1977). We join the courts that have  rejected it.

We hold that the trial court  was correct in entering summary judgment for I.M.T. on the second count of  plaintiff’s petition. Costs are taxed one-half to plaintiff and one-half to
defendants.

AFFIRMED IN PART AND
REVERSED AND REMANDED IN PART.

 

530  N.W.2d 668

Gary
PAPENHEIM, Appellant,

v.

Robert LOVELL, Appellee.

No.
93-1494.

Supreme Court of Iowa.

March 29, 1995.

 

Page 669

 

 

        Gary Papenheim, Parkersburg,
pro se.

Theodore T. Duffield of
Patterson, Lorentzen, Duffield, Timmons, Irish, Becker & Ordway, Des
Moines, for appellee.

Considered en banc.

SNELL, Justice.

Gary Papenheim appeals a  district court decision which awarded him repair, loss-of-use, and  inconvenience damages for injury caused to his vehicle by a vehicle owned by  Robert Lovell. He asserts substantial evidence does not support the district  court’s determination that his vehicle could by repair be placed in as good  condition as it was prior to the accident. He therefore seeks the difference  between the value of his vehicle prior to and after the accident rather than  repair damages. He additionally challenges the reasonableness of the court’s  loss-of-use and inconvenience damages. We affirm in part, reverse in part, and  remand.

I. Factual Background

On April 28, 1993, Papenheim  filed a petition claiming the operator of a vehicle Lovell owned had  negligently damaged his vehicle. Lovell did not file an appearance or an answer  and the court declared him in default. The court then held a hearing on the
issue of Papenheim’s damages.

At the hearing, Papenheim  testified the accident occurred when he was driving down a residential street  in Cedar Falls. Papenheim claimed Lovell’s truck struck his own vehicle twice  in the rear after the truck pulled out from a parking place. Papenheim’s  vehicle, a 1991 Oldsmobile Toronado, was damaged in the right rear quarter  panel, rear bumper area, and trunk lid. At the time of the accident Papenheim’s  vehicle had been driven 2900 miles.

Papenheim requested damages  for: (1) the difference between the market value of his vehicle before and  after the occurrence; (2) the reasonable value of the loss of use of the vehicle for the time required to repair it; and (3) compensation for lost time  and inconvenience. Papenheim, and his expert witness, John Kannegeiter,  provided the only testimony at the hearing.

The court recognized  Kannegeiter, an owner of two used car dealerships and a body shop, as an expert  witness. Kannegeiter testified that the focus of his current business is to  purchase damaged cars at insurance auctions around the country, rebuild, and  sell them. He testified that in the last ten years he has probably purchased  seven to eight hundred cars for this purpose.

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Kannegeiter observed the car  both before and after it was repaired. He testified that it was his opinion  that repair work could not return Papenheim’s vehicle to the condition it had been in prior to the accident. Kannegeiter testified that according to his  observations of the vehicle on the date of the hearing, repair work had failed  to correct the damage. Specifically, he noted the reverse lights do not line up  with the bumper correctly, some “body lines are off,” the bumper does  not fit the quarter panel properly, the wheel moldings do not fit, the trunk  jamb is “pretty messy,” the trunk lid gap is not correct, and the  paint applied following repair has begun to chip.

The original window sticker  price of the Oldsmobile Toronado was $25,509. Kannegeiter believed that at the  time of the accident, the vehicle had a market value of $22,000. He based this  opinion on a December 1990 observation of a comparable 1990 Oldsmobile which  carried a market value of $22,300. Without ever observing Papenheim’s car, an employee of Badger Chevrolet, Buick, Pontiac, Inc., located in Parkersburg,  Iowa, provided a statement that the book value of a 1991 Oldsmobile Toronado  with 3000 miles on it was $21,300.

In Kannegeiter’s opinion, the value of Papenheim’s vehicle in its damaged condition was $11,000. It was  his opinion that if he purchased the vehicle in its damaged state for $11,000  and repaired it for an estimated $4000, it would have a resale market value of
$17,000 to $18,000. Kannegeiter testified that the damage to this 1991 Oldsmobile greatly reduced the market value of the vehicle because potential  purchasers would expect to pay a lower price for a vehicle that had been  damaged to this extent.

John Deery Motor, Inc., the  Cedar Falls dealer that originally sold Papenheim the automobile, estimated the  amount of damage to be $4,666.63. Northwest Paint and Body Shop, located in  Parkersburg, estimated the damage at $4,158.23. Northwest ultimately repaired  the vehicle for this amount.

In order to present evidence  of the value of loss of use of the car, Papenheim testified that he made  inquiries at an Avis car rental shop regarding the rental prices of similar
vehicles. At the time of the accident, Avis did not have a 1991 Toronado for  rent, but rented a full-size car such as a Pontiac Bonneville or Oldsmobile  Delta 88 for a weekly price of $219. Papenheim believed that his car was more  valuable than either a Bonneville or a Delta 88, and upon further inquiry,  learned that Avis rented luxury automobiles such as Cadillacs for $319 per  week. Papenheim inquired about car rental prices again just before the hearing,  and Avis informed him that its rental price for full-size cars was $224 per  week or $889 per month.

Northwest Paint did not  complete the repair of the vehicle until over thirteen weeks after the accident  occurred. Papenheim testified that he could not use the car during this time
because: (1) the taillight electronics were damaged and he could not therefore  legally operate the car; and (2) he did not feel it would be appropriate to use  the car for business purposes in its damaged state. He testified that there  were two reasons the repair of the vehicle took so long. First, he spent the  “first couple of weeks” negotiating on a price of repair. Second, all  local body shops were unusually busy due to a severe hail storm that occurred  in the Waterloo-Cedar Falls area in May of 1991. On the issue of personal inconvenience, Papenheim testified that he spent approximately twenty hours of  his personal time on matters associated with the accident and subsequent  lawsuit.

The trial court granted  Papenheim a total award in the amount of $5,423.63 plus interest accruing from  the date he filed the lawsuit and court costs. Specifically, the court awarded Papenheim $4,666.63 for repairs and $657 for loss of use of the car for three  weeks, calculated at a rate of $219 per week. The court granted the loss-of-use  award for only a three week period because it believed the actual thirteen week  period was unreasonably long. Finally, the court ruled that $100 was reasonable  compensation for Papenheim’s inconvenience and loss of time.

On appeal, Papenheim raises  three arguments. First, he contends the trial court erred in failing to award  him compensation for loss of value of the vehicle and in ignoring

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the testimony of the expert witness.   Second, he asserts the trial court erred in finding that he was not entitled to  damages for the approximately thirteen week period he was without use of the car and that three weeks was a reasonable time for the calculation of  loss-of-use damages. Finally, Papenheim argues he should receive $500 rather  than $100 for inconvenience and lost time.

II. Standard and Scope of  Review

In a law action, we review a  district court’s determinations for errors in its application of legal  principles and conclusions of law. Iowa R.App.P. 4; Waukon Auto Supply v.  Farmers & Merchants Sav. Bank, 440 N.W.2d 844, 846 (Iowa 1989); Grinnell  Mut. Reinsurance Co. v. Voeltz, 431 N.W.2d 783, 785 (Iowa 1988); In re Mt.  Pleasant Bank & Trust Co., 426 N.W.2d 126, 129 (Iowa 1988); Cross v.  Lightolier, Inc., 395 N.W.2d 844, 846 (Iowa 1986). Where the trial court sits  as the finder of fact, the court’s findings have the effect of a jury verdict  and bind us if substantial evidence supports them. Waukon, 440 N.W.2d at 846; Grinnell, 431 N.W.2d at 785; In re Mt. Pleasant, 426 N.W.2d at 129; Cross, 395  N.W.2d at 846-47. Evidence is substantial when a reasonable mind could accept  it as adequate to reach the same findings. Waukon, 440 N.W.2d at 846; Grinnell,  431 N.W.2d at 785. Evidence is not insubstantial merely because it would have  supported contrary inferences. Grinnell, 431 N.W.2d at 785.

We construe the trial  court’s findings broadly and liberally. Id. In case of doubt or ambiguity we  construe the court’s findings of fact to uphold rather than defeat, the
judgment. Id. In addition, the review standard prohibits us from weighing the
evidence or the credibility of witnesses. Id.

III. Measure of Damages

The law of Iowa governing  damages to automobiles was initially established by our court in In re Gray’s  Estate, 201 Iowa 876, 208 N.W. 358 (1926). We expanded these rules by adding to  the measure of damages the loss of the reasonable value of the use of the vehicle during the time of its repair or replacement. Long v. McAllister, 319  N.W.2d 256 (Iowa 1982). The rules formulated in Long are:

(1) When the motor vehicle  is totally destroyed or the reasonable cost of repair exceeds the difference in  reasonable market value before and after the injury, the measure of damages is  the lost market value plus the reasonable value of the use of the vehicle for
the time reasonably required to obtain a replacement.

(2) When the injury to the  motor vehicle can be repaired so that, when repaired, it will be in as good  condition as it was in before the injury, and the cost of repair does not
exceed the difference in market value of the vehicle before and after the injury, then the measure of damages is the reasonable cost of repair plus the reasonable value of the use of the vehicle for the time reasonably required to  complete its repair.

(3) When the motor vehicle  cannot by repair be placed in as good condition as it was in before the injury,  then the measure of damages is the difference between its reasonable market value before and after the injury, plus the reasonable value of the use of the vehicle for the time reasonably required to repair or replace it.

Long, 319 N.W.2d at 261.

These rules are in accord with the general rule in most states. See 8 Am.Jur.2d  Automobile and Highway Traffic § 1128, at 317 (1975); see also Chlopek v.  Schmall, 224 Neb. 78, 396 N.W.2d 103, 108 (1986); Camaraza v. Bellavia Buick  Corp., 216 N.J.Super. 263, 523 A.2d 669, 671 (1987).

The trial court applied the  second standard and used as the measure of damages the reasonable cost of  repair of Papenheim’s vehicle. The trial court reasoned as follows. The value  of Papenheim’s vehicle before the accident was $22,000. The value after the  accident was $11,000, a difference of $11,000. Since the cost of repairs was  $4,666.63, a figure less than the $11,000 difference, the proper rule to apply,  under Long, was the second standard. Papenheim asserts that the trial court  erred in using the second

Page 672

standard since substantial evidence  does not support the court’s determination that Papenheim’s vehicle could by  repair be placed in as good condition as it was in before the accident.   Papenheim argues that the court should have used the third standard and awarded  him the difference between the market value of the vehicle before the injury
and after. Based on the proof offered by Papenheim in this case, we agree that  the third standard should have been applied.

In Halferty v. Hawkeye  Dodge, Inc., 158 N.W.2d 750 (Iowa 1968), we addressed the same issue. There the  owner of an automobile damaged by the defendant’s negligence claimed that the  repairs made to his vehicle did not return the car to its pre-accident market value. We said:

There was evidence one could see by an inspection it had been damaged and
repaired. There was also evidence the market value of such car was less than a
car in similar condition which had never been damaged. The automobile,
therefore, was not placed in as good condition as it was before the injury and
the proper measure of damages would be the difference between its reasonable
value immediately before and immediately after the accident.

Halferty, 158 N.W.2d at 753.
Because the defendant had already repaired the plaintiff’s car in Halferty, we
allowed the car owner to recover the difference between the value of the
repaired car and the value of the automobile before the accident, in addition
to the reasonable cost of repairs. Id. at 753-54.

The rule applied in Halferty  is consistent with the rule adopted in the Restatement (Second) of Torts for  damage 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.

Restatement (Second) of Torts § 928 (1979). Many courts have allowed recovery of depreciation in market value where repairs to the damaged automobile do not restore it to its pre-accident market value. E.g., Farmers Ins. Co. v. R.B.L. Inv. Co., 138 Ariz.
562, 675 P.2d 1381, 1383 (Ct.App.1983); Littlejohn v. Elionsky, 130 Conn. 541,
36 A.2d 52, 53 (1944); Perma Ad Ideas of Am., Inc. v. Mayville, 158 Ga.App.
707, 282 S.E.2d 128, 130 (1981); Gary v. Allstate Ins. Co., 250 So.2d 168, 169
(La.Ct.App.1971); Fred Frederick Motors, Inc. v. Krause, 12 Md.App. 62, 277
A.2d 464, 467 (1971); Rosenfield v. Choberka, 140 Misc.2d 9, 529 N.Y.S.2d 455,
458 (N.Y.Sup.Ct.1988); Newman v. Brown, 228 S.C. 472, 90 S.E.2d 649, 652
(1955); Averett v. Shircliff, 218 Va. 202, 237 S.E.2d 92, 96 (1977); accord 22
Am.Jur.2d Damages § 436, at 518-19 (1988); see Waseca Sand & Gravel, Inc.
v. Olson, 379 N.W.2d 592, 595 (Minn.Ct.App.1985); Merrill v. Tropoli, 414
S.W.2d 474, 476 (Tex.Ct.App.1967); Krueger v. Steffen, 30 Wis.2d 445, 141
N.W.2d 200, 201-02 (1966); cf. Merrill Stevens Dry Dock Co. v. Nicholas, 470
So.2d 32, 33 (Fla.Dist.Ct.App.1985) (damaged boat); Trailmobile Div. of
Pullman, Inc. v. Higgs, 12 Ill.App.3d 323, 297 N.E.2d 598, 600 (1973) (damaged
trailer); Thomas v. Global Boat Builders & Repairmen, Inc., 482 So.2d 1112,
1115 (Miss.1986) (damaged boat).

Allowance of diminution in  market value where repairs cannot restore the vehicle to its pre-accident  condition is consistent with the general rule that the measure of damages is the amount that will compensate for all detriment naturally and proximately  caused. See Camaraza, 523 A.2d at 671; Fred Frederick Motors, 277 A.2d at 466;  Rosenfield, 529 N.Y.S.2d at 458. If repairing the vehicle does not return the  car to its pre-accident condition as measured by its market value, then the owner is not compensated for the detriment caused if only awarded cost of repairs.
Fred Frederick Motors, 277 A.2d at 466; Rosenfield, 529 N.Y.S.2d at 458.

This measure of damages for  cars not totally destroyed is also consistent with allowing the owner of a  vehicle which is completely destroyed to recover the market value. If the owner of a vehicle which is not

Page 673

totally destroyed is not compensated  for any diminution in market value after repairs in addition to the cost of  repairs, then there would be a different measure of recovery depending upon  whether the vehicle was partially or completely destroyed. Fred Frederick Motors, 277 A.2d at 466. Only in the latter situation would the owner be fully  compensated.

For these reasons, we apply  the measure of damages we originally adopted in Halferty to the facts of this  case. Under this rule, if Papenheim proved that repairs would not fully restore  his car to its pre-accident market value, he was entitled to recover the  difference between the reasonable market value of his automobile before and  after the accident. We must determine whether substantial evidence supports the  trial court’s finding that Papenheim did not meet his burden of proof.

A thorough review of the  record, including a consideration of the nature of the damages the vehicle  experienced, does not demonstrate the existence of substantial evidence to
support the trial court’s determination that the vehicle could by repair be placed in as good condition as it was in before the accident. The nature of the  damage to the vehicle in this instance does not itself constitute evidence  which a reasonable mind could accept as adequate to reach the court’s findings.   See Waukon, 440 N.W.2d at 846; Grinnell, 431 N.W.2d at 785. In fact, the  defendant did not present any evidence at trial whatsoever, and one could not  reasonably infer from the evidence in the record, that the vehicle could by  repair be placed in the same condition it was in prior to the accident.

In this case, the vehicle at  issue was in a nearly new condition. Evidence indicated the car experienced a  loss in value due to the accident and could not be returned to its pre-accident  condition before repairs. We therefore reverse the trial court’s decision to the extent it only awarded damages for the cost of repairs. We remand for a  determination on the present record of the difference between the vehicle’s  value before and after the accident.

IV. Loss-of-Use and  Inconvenience Damages

At trial, Papenheim  requested damages for the loss of use of his vehicle for thirteen weeks and  presented evidence of the weekly and monthly rate for rental of similar vehicles.   The trial court held that only three weeks loss-of-use was reasonable and held  in Papenheim’s favor accordingly at a weekly rental rate associated with  full-size cars such as a Pontiac Bonneville or Oldsmobile Delta 88. Papenheim  argues the court erred in failing to award him the damages for thirteen weeks  because circumstances reasonably kept him from getting his car repaired for  this length of time. Lovell contends the trial court acted reasonably in  awarding Papenheim damages for only three weeks loss-of-use.

Under Long, a plaintiff  seeking damages for injury to a motor vehicle may also seek the reasonable  value of the use of the vehicle for the time reasonably required to repair or
replace it if the vehicle cannot by repair be placed in as good condition as it  was in at the time of the accident. Long, 319 N.W.2d at 261. In order for  damages to be adequate, they must “fairly and reasonably compensate an  injured party for the injury sustained.” Householder v. Town of Clayton,  221 N.W.2d 488, 493 (Iowa 1974); Jackson v. Roger, 507 N.W.2d 585, 589 (Iowa  App.1993). A damage award “need only bear a ‘reasonable relationship to  the loss suffered’ to be sustained.” Jackson, 507 N.W.2d at 589 (quoting Householder, 221 N.W.2d at 493).

Papenheim contends an award  of damages for the entire thirteen week period is justified because: (1) he  spent the “first few weeks” obtaining estimates and negotiating; and (2) when he determined he could not sell the car, he sought to have it repaired,  but all local body shops were excessively busy due to a recent severe  hailstorm. We conclude that the record supports the trial court’s finding that  thirteen weeks was not a reasonable length of time for the vehicle to be  unrepaired. The trial court’s award of three weeks loss-of-use damages at $219  per week fairly and reasonably compensated Papenheim for the loss of use of his  vehicle.

Page 674

We therefore affirm the court’s  decision on this matter.

At trial, Papenheim  additionally sought monetary damages for the personal time he spent dealing  with matters related to the accident. He asserts that he spent approximately  twenty hours of his own time on this controversy. The trial court awarded him  $100 for this inconvenience and on appeal, he asks us to raise this amount to  $500. Lovell does not challenge the court’s $100 award other than to assert  that there is no precedent for such an award.

We know of no authority or  precedent to allow the award of damages to plaintiff for time spent dealing  with matters related to the accident. However, defendant did not present that  challenge to the award in the trial court. We therefore affirm the trial  court’s award of $100 for this item of damages.

AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED.

 

 

 

 

 

 

541  N.W.2d 914

HAWKEYE
MOTORS, INC., Plaintiff-Appellant,

v.

Amy L. McDOWELL, Defendant-Appellee.

No.
94-1034.

Court  of Appeals of Iowa.

Oct.  31, 1995.

 

Page
915

 

 

Robert A. Nading II of
Nading Law Firm, Ankeny, for appellant.

Mark D. Lowe of Hopkins
& Huebner, P.C., Des Moines, for appellee.

 

Page 916

Heard by SACKETT, P.J.,
CADY, J., and PERKINS, Senior Judge. ^*

CADY, Judge.

This is an appeal of the  district court’s determination of damages to a car owned by Hawkeye Motors,  Inc. We affirm the district court’s order.

A consensual operator of Amy  McDowell’s car negligently caused it to crash into a 1990 Buick Reatta  convertible owned by Hawkeye Motors, Inc. and parked in its used car lot.
Hawkeye filed a petition at law against McDowell claiming damages based on the  cost of the repair and diminished value to the vehicle.

McDowell acknowledged  liability at a bench trial but disputed Hawkeye’s assessment of the amount of  damages. The parties agreed the value of the car before the accident was approximately $21,000. Hawkeye claimed after the accident the value decreased by the highest estimated cost of repair, $3484, as well as an additional  diminution in market value between $5900 and $7000. Hawkeye’s expert witnesses indicated the car was a collector’s item and prospective buyers would be  unwilling to pay full market price after learning it had been involved in an  accident. Hawkeye argued it would be required to inform potential purchasers of  the accident under Iowa Code section 321.69 (1993) because the damage exceeded  $3000.

McDowell presented expert  testimony that the value of the car was not diminished beyond the cost of  repair. It also presented evidence the car was not a collectible.

The district court concluded  the proper measure of damages was the difference between the car’s market value  before the accident and its market value after the accident. The court ruled  that an award of $4000 would place Hawkeye in the same position it was before the accident. This figure included the cost of repair. The court based its  decision on the depreciation in the NADA book value of the car from $20,750 at the time of the accident to the book value of $18,500 at the time of trial.

Hawkeye appeals claiming the  district court’s award was not supported by the evidence and was based on an  erroneous application of the law.

I. Standard of Review

Our review of this law  action is for the correction of errors of law. Chariton Feed and Grain, Inc. v.  Harder, 369 N.W.2d 777, 782 (Iowa 1985). The finding of fact of the court
sitting as a court at law take on the force of a jury verdict. Murray v.  Conrad, 346 N.W.2d 814, 817 (Iowa 1984). We view the evidence in a light most  favorable to those findings, and are bound by them if supported by substantial  evidence. Id. If the findings are ambiguous, they will be construed to uphold,  not defeat, the judgment. Byers v. Contemporary Industries Midwest, Inc., 419 N.W.2d  396, 397 (Iowa 1988).

II. Damages

The law in Iowa governing  damages to automobiles is well settled and follows three general standards.   Papenheim v. Lovell, 530 N.W.2d 668, 671 (Iowa 1995). They are:

(1) When the motor vehicle is  totally destroyed or the reasonable cost of repair exceeds the difference in  reasonable market value before and after the injury, the measure of damages is  the lost market value plus the reasonable value of the use of the vehicle for
the time reasonably required to obtain a replacement.

(2) When the injury to the  motor vehicle can be repaired so that, when repaired, it will be in as good  condition as it was in before the injury, and the cost of repair does not exceed the difference in market value of the vehicle before and after the  injury, then the measure of damages is the reasonable cost of repair plus the  reasonable value of the

Page 917

use of the vehicle for the time reasonably required to complete its repair.

(3) When the motor vehicle cannot by repair be placed in as good condition as it was in before the injury, then the measure of damages is the difference between its reasonable market value before and after the injury, plus the reasonable value of the use of the vehicle for the time reasonably required to repair or replace it.

Id.; Long v. McAllister, 319  N.W.2d 256, 261 (Iowa 1982).

The third standard allows  for the recovery of the diminution in market value when the repairs cannot restore the car to its pre-accident condition. When the repairs are actually
performed on the vehicle, diminution in market value is determined by the difference between the value of the repaired car after the accident and the value of the car before the accident. Papenheim v. Lovell, 530 N.W.2d at 672.   Additionally, the owner is entitled to recover the reasonable cost of repairs.   Id.

In this case, the trial court applied the third standard, but considered the depreciation of the book  value of the car from the time of the accident to the time of trial in arriving  at a total damage award of $4000. The trial court stated:

The court finds that an award of $4000 would place the plaintiff in the same  position as it was before the accident. This figure includes the cost of  repair. The court basis [sic] its decision on the fact according to the  testimony of Don Moyer, president of the Plaintiff, the NADA book value of the  automobile is presently $18,500.00. The NADA book value of the automobile at the time of the accident was $20,750.00. Therefore, the automobile has depreciated in value, not appreciated.

Hawkeye claims the trial  court misapplied the legal standard by determining damages based on the difference between the book value of the car at the time of the accident and the book value at the time of trial.

Mindful of our recovery standards, we do not share Hawkeye’s view of the trial court’s application of the law. We find no legal error.

The expert witnesses  presented by Hawkeye considered the Reatta to be a rare collectible car, a  factor considered by them in determining its post-accident market value. They opined the value of a collectible car generally diminishes more following an  accident than a car that is not considered a collectible. McDowell, however, presented  evidence the car was not a collectible and used the book value of Reattas at  the time of trial to show they have generally declined in value since the  accident. McDowell’s expert indicated collectible cars normally do not decline  in value. The conflicting evidence over whether the car was a collectible impacted the determination of damages, and the trial court was permitted to resolve the dispute in applying the appropriate legal standard.

The trial court did not misapply the governing legal standard, but found Hawkeye should not recover the full amount of their requested damages since the car was not a collectible considering its depreciation in value. We find no error at law.

Hawkeye also argued the damage award was based on speculation and was not supported by substantial evidence. It notes none of the three expert witnesses who testified at trial placed the diminished value and cost of repair of the car following the accident at $4000. To the contrary, Hawkeye’s two experts placed the  after-repair diminution in value between $5,900 and $7000, while McDowell’s expert witness found no diminution in value beyond the cost of repair. Thus,  since the trial court found the cost of repair exceeded $3000, Hawkeye asserts  it arbitrarily fixed the diminution in value in determining total damages of  $4000.

The determination of the amount of damages in a bench trial ordinarily lies within the sound discretion of the trial court. See Woode v. Kabela, 256 Iowa 622, 633, 128 N.W.2d 241, 247  (Iowa 1964); See also Hysell v. Iowa Public Service Co., 534 F.2d 775 (8th  Cir.1976). This discretion, however, is not without limits. Id. The trial court may not disregard evidence and arbitrarily fix an amount of damage for which no basis in the evidence exists. Henrich v. Oppedal, 248

Page 918

Iowa 509, 81 N.W.2d 429, 430 (1957).
On the other hand, precision is not required. We will uphold an award of  damages so long as the record discloses a reasonable basis for which the award can be inferred or approximated. Westway Trading Corp. v. River Terminal Corp., 314 N.W.2d 398, 403 (Iowa 1982). An award of damages within the range of the evidence will not be disturbed on appeal. Olsen v. Drahos, 229 N.W.2d 741, 742 (Iowa 1975).

The range of the evidence in  this case for the diminution in value of the car after repairs was between $0 and $7000. The trial court need not select one of the two extremes simply
because there was no expert testimony which pinpointed damages between the range. The trial court was not obligated to totally accept or reject the expert witnesses, but was free to consider the strengths and weaknesses of each witness and use part, none, or all of their testimony. See Ballard v. Amana Soc., Inc., 526 N.W.2d 558, 561 (Iowa 1995); Mercy Hosp. v. Hansen, Lind & Meyer, 456 N.W.2d 666, 672 (Iowa 1990) (it is for the fact finder to determine the weaknesses in an expert’s testimony). The award of the trial court was
within the range of the evidence. We conclude it was supported by substantial evidence.

AFFIRMED.

—————

* Senior judge from the Fifth Judicial
District serving on this court by order of the Iowa Supreme Court.

 

 

 

Iowa
Uniform Civil Jury Instructions Related to Vehicle Damage

(Current as of January 4, 2014; Caution: statutes and case law—and therefore Jury Instructions—are always evolving and may change thereafter as new cases may be decided thereafter, so be sure to consult and experienced and knowledgeable personal injury attorney before relying upon any of the information contained herein)

  

200.2  Vehicle Damage – Repairs Only – Repairable To Prior Condition For
Less Than Market Value.
The reasonable cost of repair of the vehicle.

Authority

Long  v. McAllister, 319 N.W.2d 256 (Iowa 1982)

 

200.3  Vehicle Damage – Repairs And Use – Repairable To Prior Good
Condition For Less Than Market Value.  The reasonable cost of repair of the vehicle
plus the reasonable value of the use of the vehicle for the time reasonably required to complete its repair.

Authority

Long  v. McAllister, 319 N.W.2d 256 (Iowa 1982)

 

200.4  Vehicle Damage – Market Value And Use – Not Repairable To Prior
Good Condition.  The difference between the  reasonable market value of the vehicle immediately before and after the damage,  plus the reasonable value of the use of the vehicle for the time reasonably required to replace it or return it to use.

Authority

Papenheim  v. Lovell, 553 N.W.2d 328 (Iowa 1996)

 

200.5  Vehicle Damage – Market Value And Use – Total Destruction – Cost
Of Repairs Exceeds Market Value.  The difference between the reasonable market
value of the vehicle immediately before and after the damage, plus the  reasonable value of the use of the vehicle for the time reasonably required to obtain a replacement.

Authority

Long  v. McAllister, 319 N.W.2d 256 (Iowa 1982)

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