Verdict - Spring 2016 - (Page 34)

> FEATURE STORY Diminished Val Not Just For Cars Anymore BY TOM LACY AND RANDY EDWARDS HISTORY In State Farm Mutual Automobile Insurance Co. v. Mabry,1 the Georgia This is particularly true in fire or water losses that result in mold and in Supreme Court recognized that insureds were getting shortchanged remediation techniques that give a potential subsequent purchaser pause. on adjustment of property damage claims arising out of car wrecks, Royal Capital owned a commercial building in Buckhead that was dam- because even if the carrier "fixed" the car, the car was worth less due aged by construction on adjacent property. Royal Capital made a claim on to it having been wrecked in the first place. "The documents from State its commercial property policy seeking both the costs of repair and any Farm acknowledged that there is a common perception that a wrecked post-repair diminution in value. The carrier paid more than $1.1 million in vehicle is worth less simply because it has been wrecked." This dimi- repair costs but refused to pay for any diminution in value. The Georgia nution in value was something the insurance industry was loath to pay Supreme Court quoted Mabry at length for the proposition that value not because it thought that fixing the car was putting the insured into the condition is the proper baseline for measuring damages when a carrier position he or she was in prior to the wreck. The Court disagreed and promises to pay for the policyholder's loss.5 2 defined this component of the loss as follows: Having reviewed both Georgia law and that of other jurisdictions, we adhere to the long-standing contract interpretation set forth in the Georgia decisions discussed above. The rationale of those cases remains solid: the insurance policy, drafted by the insurer, promises to pay for the insured's loss; what is lost when physical damage occurs is both utility and value; therefore, the insurer's obligation to pay for the loss includes paying for any lost value. That interpretation has stood for 75 years in Georgia and has become, therefore, part of the agreement between the parties when they enter into a contract of insurance which includes the promise to pay for the insured's loss.3 Policyholders and their attorneys had thought for a long time that policyholders in first-party property cases were similarly getting shortchanged in the adjustment of claims for damage to real property. As one well-respected public adjuster told me, an insured can get rid of the smell of the smoke after a fire loss but not the memory of it. That is particularly true in these days of more complete real estate disclosures, where sellers are required to disclose certain types of losses. The Georgia Supreme Court again recognized the carrier's responsibility to pay for the entirety of the policyholder's loss in Royal Capital Development, LLC v. Maryland Casualty Company.4 In Royal Capital, the court acknowledged that merely reconstructing a damaged building may not compensate the policyholder for the full loss. 34 Georgia Trial Lawyers Association

Table of Contents for the Digital Edition of Verdict - Spring 2016

President’s Message
GTLA at 60: A Conversation with Tommy Malone
Law Practice and Cloud Computing: Staying Ethical in a Digital World
14 Years in the Making: Justice Delayed, but Not Denied
What is the Plaintiff’s Burden in Proving the Value of Medical Expenses?
An Introduction to Daycare Negligence Cases
Diminished Value Claims: Not Just for Cars Anymore
Seeking Justice for Victims of Child Sexual Abuse
Case Updates: What’s New?
Workers’ Comp: Recent Developments
Civil Justice PAC Contributors
Champion Members
Welcome New GTLA Members!
Notes: What’s New with GTLA Members
Index to Advertisers/

Verdict - Spring 2016