June 16, 2019

Colorado Supreme Court: Loss of Use Damages in Commercial Setting Measured by Actual Lost Profits or by Reasonable Rental Value

The Colorado Supreme Court issued its opinion in Koenig v. PurCo Fleet Services, Inc. on September 10, 2012.

Calculation of Damages.

The dispute in this case arose out of a rental car contract between petitioner Judith Koenig and National Car Rental at the Durango Airport (National). Koenig hit a deer while driving a rental vehicle. After the accident, National assigned its damage claim to PurCo Fleet Services, Inc. (PurCo). PurCo sued Koenig to collect damages related to the incident, including damages for loss of the vehicle’s use during the time it was being repaired. PurCo sought to measure loss of use damages by using the reasonable rental value of a substitute vehicle. Koenig filed a motion for summary judgment, which the trial court granted, holding that PurCo could prevail on its loss of use damages claim only if it suffered actual lost profits. The court of appeals reversed the trial court’s summary judgment and remanded the case. It agreed with the trial court’s conclusion that, in general, the appropriate measure of loss of use damages in a commercial setting is actual lost profits, but concluded that the rental agreement in this case altered the measure of loss of use damages. Accordingly, PurCo was required to show certain loss prerequisites.

The Supreme Court affirmed the court of appeals’ judgment on different grounds. The Court held that under Denver Building & Construction Trades Council v. Shore, 287 P.2d 267 (Colo. 1955), loss of use damages in a commercial setting may be measured either by actual lost profits or by reasonable rental value. PurCo is entitled to recover loss of use damages regardless of its actual lost profits. The Court vacated the court of appeals’ judgment with respect to loss of use damages and loss prerequisites. Because the trial court granted summary judgment in Koenig’s favor, it did not reach the question of how reasonable rental value would be calculated in this case. Accordingly, the case was remanded for calculation of the reasonable rental value of a substitute vehicle.

Summary and full case available here.

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