TOTAL DESTRUCTION OF PROPERTY DOES NOT PREVENT A RECOVERY FOR LOSS-OF-USE DAMAGES OR LOST PROFITS

It has long been considered the law in Texas that recoverable damages for total destruction of property would not include loss-of-use damages. But in January, the Supreme Court of Texas held that there are instances in which a property owner with total destruction of its property can recover loss-of-use damages in addition to the fair-market-value damages otherwise recoverable. In J&D Towing, LLC v. American Alternative Ins. Corp., No. 14-0574 (Tex. Jan. 8, 2016), the plaintiff, a tow truck company whose only truck had been totally damaged in a car accident, sought lost profits during the period of time that the company was without a tow truck because the tortfeasor’s insurer refused to timely pay on the clear liability claim. The Court held that under the circumstances presented, the lost profit damages were not barred as a matter of law simply because the damage was a total loss; the tow truck company was entitled to seek the lost profits damages for the time the company was without a truck in the same way that it would have been entitled to seek such damages if the damage had been a repairable loss or partial destruction. The court warned, however, that certain limitations to such loss-of-use damages exist, and the damages could not be awarded for an unreasonably long period of lost use.