Oliver v. Henry (CA1 /28/11)

This question of diminished value is more complex than the parties or court wish to point out.

Henry ran into Oliver’s new Jeep. Henry’s insurance company paid about $15,000 to fix it. Oliver then sued for diminished value of about $9,000. Henry’s defense was that Oliver shouldn’t get diminished value because he had no intention of selling the car. The trial court denied summary judgment on that and an arbitrator found for Oliver. Henry appeals. The Court of Appeals affirms.

The opinion first explains that diminished value is compensable, though Henry hadn’t denied that. It then holds that a sale is not necessary in order to determine or make “actual” the diminished value. The cases do not explicitly say so. The Restatement might say so, depending on how you interpret it, but the court doesn’t interpret it that way. And “a victim should [not] be required to sell his vehicle in order to establish a claim.”

Well, no, unless that is an element of the claim; the argument assumes its own truth. But the bigger problem is that not requiring one party to sell now requires the other to buy now. If the accident hadn’t happened the value would remain in the car and would steadily erode until the car was sold; now it is converted into immediate wealth at immediate value. The claim here was that a buyer would pay only wholesale value because of the crash and that the difference between wholesale and retail is $9,000. But when Oliver eventually does sell his Jeep the difference between wholesale and retail is going to be a whole lot less than that. Oliver is being wildly overcompensated.

These things can probably be addressed by testimony but it would be nice to see somebody suggest that the issue is more than black and white. But it doesn’t look like either party here did so we don’t blame the court.

(link to opinion)