TEXAS SUPREME COURT ADDRESSES LOSS-OF-USE DAMAGES IN TOTAL-DESTRUCTION CASE

In J&D Towing, LLC v. Am. Alternative Ins. Corp., the Texas Supreme Court announced for the very first time, that Texas law does permit an owner of personal property that has been totally destroyed to recover loss-of-use damages, such as lost profits, in addition to direct damages. J&D lost its only tow truck when a negligent motorist collided with it, rendering it a total loss. J&D filed a claim with its insurer, AAIC, seeking recovery for loss of use of its truck. A suit ensued. The trial court awarded $22,000 to J&D for its loss-of-use damages, but the judgment was reversed by the appellate court. J&D appealed to the Texas Supreme Court.

The Court acknowledged that it has never expressly permitted or prohibited loss-of-use damages where personal property has been totally destroyed. Upon surveying other states’ law, the Court found the modern trend persuasive – that full and fair compensation requires the availability of loss-of-use damages in both partial-destruction and total-destruction cases. Thus, the Court held for the very first time that Texas law does permit recovery of loss-of-use damages, in addition to direct damages for personal property that has been totally-destroyed, just as in partial-destruction cases. The Court therefore reversed and rendered judgment in favor of J&D Towing.

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