Damages

In the published decision of Certain Underwriters at Lloyds Subscribing to Policy PLH-0013397, as subrogee of Laura Lindsey v. Public Service Electric & Gas, 2019 N.J. Super. LEXIS 88 (App. Div. June 17, 2019), the Appellate Division decided whether homeowners who were displaced due to a fire caused by Public Service Electric & Gas were limited to the cost of alternate shelter or whether the homeowners may also seek additional damages based upon their inconvenience due to the loss.  There were seven consolidated cases, all brought against Public Service Electric & Gas (“PSE&G”), in which a jury found PSE&G liable for the occurrence that caused the loss.  Thereafter, the issue remained whether the homeowners were entitled to any additional damages for the loss of use of their property or their inconvenience beyond the cost of alternate shelter during their period of displacement.

These claims arose from a winter storm in February 2014 when a high voltage powerline in Willingboro belonging to PSE&G fell and ignited fires in plaintiffs’ homes.  As a result, they were displaced from their homes for 10 months. The plaintiffs all filed suit against PSE&G.  While their homeowners’ insurance companies reimbursed the plaintiffs for their repair costs and the incidental expenses generated by their extended stays in motels during their displacement, they were not paid for damages due to the loss of use of their homes, emotional distress, and personal injuries. The plaintiffs did consent to a dismissal of all but the loss of use claim.

The trial court bifurcated the issues and, first, PSE&G’s liability was considered. After a jury found PSE&G liable for the occurrence, PSE&G then moved for summary judgment.  It argued that the plaintiffs were undamaged beyond the compensation provided by their insurers. The trial court judge agreed and granted PSE&G’s motion, dismissing the complaints. 

Thereafter, this appeal ensued.  The plaintiffs argued that the trial court judge erred in concluding that they were not entitled to damages for the loss of use of their property or their inconvenience.  In this published Appellate Division decision, the Court agreed with the plaintiffs that they were entitled to further pursue these claims.

The Court concluded that the mere fact that plaintiffs were provided motel rooms and reimbursed meal and transportation costs by their homeowner insurance companies “did not foreclose their right to seek other damages resulting from the loss of the use of their homes or any other reasonable damages caused by the inconvenience.”  The Court noted that damages in such circumstances were not limited to the pecuniary losses which are capable of precise measurement.

The Appellate Division rejected PSE&G’s argument that the plaintiffs’ inconvenience claims were not adequately supported.  The Appellate Division noted some of the plaintiffs’ claims included having to move on multiple occasions, being without personal items of sentimental value for one of the plaintiffs who died prior to trial, having to give birth prematurely to a child during the time of the displacement, generating further inconvenience during the baby’s lengthy hospitalization.

Other plaintiffs described how they were stuck depending on fast food chains for meals because their motel lacked a full service kitchen.  Another plaintiff attempted to replicate her prior existence by buying kitchen appliances but claimed it was not the same.  One of the homeowners claimed that his sleep was affected.  All of the plaintiffs “claimed that they expended time and incurred additional expenses uncovered by insurance when periodically traveling to check on their homes.”

The Court noted that PSE&G could argue that all of these damages may represent “more than fair indemnity” and may be “so extravagant” that they would be beyond the bounds of reason.  However, the Appellate Division held that the plaintiffs would be able to pursue their claims but expressed no view on the compensability of their damages.  The Court stated that would be for a jury to decide.             

Hence, the Appellate Division reversed the summary judgment in favor of PSE&G and the matter was remanded for trial for a jury to decide how much additional damages the plaintiffs may be entitled for such claims.

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.