Diminished Value: Case Law
“Where a person is entitled to a judgement 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 the plaintiff’s election, the reasonable cost of repairs or
restoration where feasible, with due allowance for any difference between the original value and the value after repairs.”
Diminution in value is a recoverable element of tort damages
Under California law the appropriate measure of tort damages is that which will make the plaintiff whole. "In tort actions, damages are normally awarded for the purpose of compensating the plaintiff for the injury suffered, i.e., restoring him as nearly as possible to his former position, or giving him some pecuniary equivalent." B.E. WITKIN, SUMMARY OF CALIFORNIA LAW, vol. 6, Torts, section 1319, at p. 776 (1988). Also see Civil Code section 3333.
Only a few cases in California address tort diminution in value, but they all plainly hold that it is a compensable element of damages when repair does not restore the pre-accident value of damaged property. Because substantial damages to automobiles nearly always diminish their resale value even if they are repaired as fully as possible, diminution in value damages are nearly always appropriate in such cases.
The case most directly on point -- which defendant's attorneys chose not to cite -- is Byrne v. Western Pipe and Steel Co., 81 Cal. App. 270 (1927). In Byrne, the defendant negligently collided with the plaintiff's vehicle, causing substantial damage to it. As would be the case in most accidents causing substantial damage to an automobile, even after the vehicle was repaired its "value . . . was much less than its value before the injury." Id. at 273. Because of this the court held that paying the cost of repair was not sufficient. Rather, the court required the defendant also to pay the difference in the vehicle's value before the accident and after it was repaired. Id.
Merchant Shippers Ass’n v. Kellogg Express & Draying Co., 28 Cal. 2d 594 (1946) also strongly supports the plaintiffs position. Although, unlike the Byrne case, Merchant Shippers does not involve automobiles, it confirms the availability of diminution in value damages when personal property cannot be restored to its pre-injury value through repairs. In Merchant Shippers, the defendant negligently damaged the plaintiff’s new machine. Although the machine was repaired, the California Supreme Court awarded diminution in value damages in addition to the costs of repair. Id., at 602. The court reasoned that, even if completely overhauled and returned to precise working order, the machine "would nevertheless remain a secondhand machine on the market." Id. at 601. Similarly, automobiles sustaining substantial damages are considered "secondhand" even if fully repaired, and diminish in value.
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Made whole in all 50 states
The Made Whole Doctrine is an equitable defence to the subrogation or reimbursement rights of a subrogated insurance carrier or other party, requiring that before subrogation and/or reimbursement will be allowed the insured must be made whole for all of its damages. Precisely what being ―made whole‖ means varies from state to state, but the concept is nonetheless fairly similar in each state. A well-respected legal treatise defines the Made Whole Doctrine as follows:
It is widely held that in the absence of contrary statutory law or valid contractual obligation to the contrary, the general rule under the doctrine of equitable subrogation is that whether an insured is entitled to receive recovery for the same loss from more than one source, e.g., the insurer and the tortfeasor, it is only after the insured has been fully compensated for all the loss that the insurer acquires a right to subrogation.
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