## Facts

- R.B.L. Investment Co., an automobile dealer, owned a new, unsold 1980 Audi held in inventory for sale.
- During a test drive, the Audi was damaged in a collision caused by a driver insured by Farmers Insurance Co. of Arizona; Farmers admitted fault.
- The retail repair estimate was $3,495.70; Farmers offered that amount, but R.B.L. refused, claiming additional loss beyond repairs.
- Farmers mistakenly issued a $9,460 draft; R.B.L. cashed it. Farmers demanded return of the amount above $3,495.70; R.B.L. offered to return only what exceeded its asserted total loss.
- The case was tried on stipulated facts, including that R.B.L. incurred repair expenditures and paid financing (interest/floor-plan) charges while the car was being repaired.
- After repair, the Audi sold for $13,500; R.B.L. claimed the accident reduced the car’s market value even after repair and that it suffered loss-of-use during the repair period.

## Issues

1. Whether the owner of a negligently damaged motor vehicle may recover damages for diminished fair market value beyond the cost of repair when repairs do not restore pre-injury value.
2. Whether the owner may recover loss-of-use damages during the period the vehicle is being repaired, including a dealer’s financing or floor-plan interest attributable to the vehicle.

## Decision

- The court reversed the trial court’s judgment that limited recovery to repair costs and denied diminished-value and loss-of-use damages.
- The court held that recoverable damages may include (1) repair costs plus any remaining diminution in fair market value after repair, and (2) loss-of-use damages for the repair period.
- The court concluded that, for a dealer, loss-of-use may be shown by reasonable floor-plan or interest charges incurred while the inventory vehicle was unavailable for sale.
- The case was remanded for a damages determination consistent with these rules.

## Legal Principles

- For injury to personal property less than total destruction, the general measure of damages is the difference between the property’s value immediately before and immediately after the injury; repair cost is evidence of, but not necessarily equal to, that loss.
- If repairs do not restore the vehicle to its pre-accident fair market value, the owner may recover residual diminished value in addition to reasonable repair costs.
- Loss-of-use damages are available for the reasonable period of repair; for an automobile dealer, compensable loss-of-use may include financing or floor-plan interest reasonably attributable to carrying an unsaleable inventory vehicle during repairs.
- A payor seeking reimbursement of an asserted overpayment cannot limit the payee’s recoverable tort damages to repair costs when the law permits diminished-value and loss-of-use components.

## Conclusion

The court held that a negligently damaged vehicle’s owner is not confined to repair-cost recovery and may also recover any post-repair diminution in fair market value and loss-of-use damages during repairs, including reasonable dealer floor-plan interest, and it remanded for recalculation of damages under these measures.


Farmers Ins. Co. of Ariz. v. R.B.L. Inv. Co., 138 Ariz. 562, 675 P.2d 1381 (Ct. App. 1983)