## Facts

- J & D Towing, LLC operated its towing business using a single tow truck.
- A negligent driver collided with the truck, rendering it a total loss.
- The negligent driver’s insurer paid its property-damage policy limits, but those limits did not compensate J & D for loss of use (including lost profits) while it had no truck.
- J & D had underinsured-motorist (UIM) coverage with American Alternative Insurance Corporation (AAIC) and submitted a UIM claim seeking loss-of-use damages.
- AAIC denied the claim, asserting Texas law does not allow loss-of-use damages when personal property is totally destroyed.

## Issues

1. Under Texas law, may an owner recover loss-of-use damages (including lost profits) when personal property is totally destroyed, in addition to the property’s pre-loss fair market value?
2. If loss-of-use damages are available in total-destruction cases, what limits apply to prevent speculative or unreasonable awards?

## Decision

- The Texas Supreme Court reversed the court of appeals and rendered judgment for J & D.
- The court held Texas law permits recovery of loss-of-use damages in total-destruction cases.
- The court rejected a categorical rule that allows loss-of-use damages for partial destruction but not for total destruction.
- The court confirmed that loss-of-use damages may include lost profits if proved with reasonable certainty and limited to a reasonable replacement period.

## Legal Principles

- Compensatory damages aim to place the injured party as nearly as possible in the position it would have occupied absent the wrong.
- Loss-of-use damages are not categorically barred merely because property is totally destroyed; they may be awarded in addition to the property’s pre-loss fair market value.
- Loss-of-use recovery is limited by traditional requirements, including proximate cause, reasonable certainty (especially for lost profits), and a reasonable duration tied to the time reasonably required to replace the destroyed property.
- The same general damages principles apply to loss of use whether property is partially damaged or totally destroyed.

## Conclusion

Texas law allows an owner whose personal property is totally destroyed to recover loss-of-use damages, including provable lost profits, for the reasonable time needed to replace the property, in addition to the property’s pre-loss fair market value.


J & D Towing, LLC v. American Alternative Ins. Corp., 478 S.W.3d 649 (Tex. 2016)