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Plaintiffs May Recover For Diminution of Value of Motor Vehicle Involved In Accident

By on May 10, 2019 in Damages with 0 Comments

In four consolidated cases appealed to the Appellate Division, the Court decided whether the plaintiffs, as motor vehicle owners, may recover for an additional reduction in value when their vehicles have become less desirable for resale due to the stigma of them having been damaged in an accident.  In the published decision of Financial Services Vehicle Trust v. Panter, 2019 N.J. Super. LEXIS 28 (App. Div. Feb. 28, 2019), the Appellate Division decided that a motor vehicle owner may recover for diminution of value of the owner’s motor vehicle that was involved in the accident, as long as the proper proofs are presented.

The Court stated that an owner of a motor vehicle (with a damaged vehicle) is not limited to the cost of repair in compensation.  Rather, the Appellate Division stated that “our courts have long recognized that a vehicle owner is entitled to recover the difference between the vehicle’s value before the harm and its value after,  . . . which could, in appropriate cases, involve any other non-speculative impact on the vehicle’s value.”

The Appellate Division noted that the measure of damages might be impacted by other circumstances beyond the mere cost of repair, such as a change in the marketplace, depreciation, and a loss of the vehicle’s use.  Also, measuring damages might be complicated by the owner’s election not to repair prior to bringing a suit.  Regardless, the Appellate Division found that all of these factors can be addressed though the submission of adequate proofs.  These factors would not bar recovery.

The Court noted that with the advent of databases such as CarFax, the public now has the ability to learn whether a vehicle wears the “Scarlet Letter” of an accident history.  The damage caused by such a “Scarlet Letter” is just another factor which varies in value and is recoverable if supported by sufficient proofs.   Hence, as a matter of law, the Appellate Division stated that “we cannot reject plaintiff’s theory that a willing buyer under no compulsion would be inclined to pay less for a vehicle with this so called “Scarlet Letter.”  The Court found that this claim is no more speculative than it is presumable but is merely susceptible to proof.  The owner of the vehicle would remain obligated to persuade the factfinder with proper evidence that the vehicle’s value has been decreased by this stigma.

Hence, the Appellate Division agreed with the trial judge’s holding “that the claim for the diminution in value because plaintiffs’ vehicles bear the “Scarlet Letter” and an accident history was cognizable and an award to redress such a loss was not speculative.”

The Court seemed to be stating that the diminution of value of the vehicle would need to be proven through expert testimony.  Expert testimony was presented in the four cases that were consolidated for this appeal.  Three of the cases ended up having their judgments vacated and remanded for further proceedings due to issues concerning proofs of ownership.  As for the fourth case, however, the trial court judge’s decision was affirmed.

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Betsy G. Ramos

About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

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