Shield Global Partners-G1, LLC v. Lindsay Forster

FILED Feb 19 2020, 9:08 am

CLERK Indiana Supreme Court Court of Appeals and Tax Court

ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE James D. Johnson Theodore G. Hammond Nathan A. Dewan Law Office of Progressive Group Jackson Kelly PLLC of Insurance Companies Evansville, Indiana Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

Shield Global Partners-G1, LLC, February 19, 2020 Appellant-Plaintiff, Court of Appeals Case No. 19A-CC-1100 v. Appeal from the Monroe Circuit Court Lindsay Forster, The Honorable Holly M. Harvey, Appellee-Defendant. Judge Trial Court Cause No. 53C06-1712-CC-2559

Mathias, Judge. [1] Shield Global Partners-G1, LLC (“Shield”) appeals the judgment of the

Monroe Circuit Court in favor of Lindsay Forster (“Forster”) in Shield’s

negligence action against Forster seeking damages for the inherent diminished

value of a motor vehicle damaged in an accident that was Forster’s fault. Shield

presents two issues for review, which we restate as: (1) whether the trial court

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erred as a matter of law by concluding that Indiana does not recognize damages

for inherent diminished value; and (2) whether the trial court clearly erred by

concluding that Shield did not present evidence sufficient to support its claim

for diminished value damages. [2] We reverse and remand.

Facts and Procedural History [3] The historical facts underlying this case are essentially undisputed. On June 15,

2017, Forster was driving a car in Bloomington, Indiana, when she rear-ended a

Chevy Silverado pickup truck (“the Truck”) driven by Lance Ingersoll

(“Ingersoll”). Forster admitted fault for the accident. [4] The Truck is registered in Ingersoll’s name. Ingersoll originally leased the Truck

from Hubler Chevrolet. Under the terms of the lease agreement, Ingersoll was

to lease the Truck from December 5, 2015 to March 4, 2019. Hubler later

assigned the lease to ACAR Leasing LTD (“ACAR”), who holds title to the

vehicle. After the accident, GM Financial, who held a security interest in the

Truck, assigned to Shield any claims for diminished market value of the Truck

as a result of the accident. [5] Prior to the accident, the Truck was appraised with a fair market value of

$36,550, according to the National Automobile Dealers Association (“NADA”)

Used Car Guide. The Truck was satisfactorily repaired for a cost of $6,852.55.

After the accident, Shield, using in-house personnel, appraised the Truck with a

fair market value of $32,529.50, again using the NADA Used Car Guide, for a Court of Appeals of Indiana | Opinion 19A-CC-1100 | February 19, 2020 Page 2 of 9

diminished value of $4,020.45. Shield then sought a second appraisal from

Stuart Raskin (“Raskin”) of South Florida Auto Appraisers, who estimated an

inherent diminished value of $7,400. [6] On December 14, 2017, Shield filed a negligence complaint against Forster

seeking damages for the diminished value of the Truck. A bench trial was held

on February 21, 2019. The trial court entered findings of fact and conclusions of

law on May 14, 2019, denying Shield’s claim for diminished value of the Truck.

In relevant part, the trial court concluded:

20. Plaintiff’s claim for “inherent diminished value, lost value and/or accelerated depreciation of the vehicle based on damage history” alone amounts to a claim for “stigma of defect” damage (as confirmed by Plaintiff’s demand packet). Indiana law does not recognize per se “stigma of defect” damages to personal property which is not permanently damaged.

21. The Plaintiff has not presented sufficient evidence to support a conclusion that the repairs to the vehicle did not restore the vehicle to its fair market value before the causative event. The Court is not persuaded by the Plaintiff’s expert, who did not inspect the vehicle, review photos of the vehicle, or in any way assess the actual condition of the vehicle as a result of the accident.

22. In the absence of evidence to determine the fair market value after repairs, and therefore determine whether the repairs were sufficient to restore the fair market value of the vehicle before the accident, the Court concludes that the cost of repairs to the vehicle in this case is an adequate measure of damages.

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23. The Court concludes that the Plaintiff is not entitled to an additional award of damages and orders that Plaintiff take nothing by way of its Complaint.

Appellant’s App. pp. 12. Shield now appeals.

Standard of Review [7] Our well-settled standard of review in cases where the trial court enters findings

of fact and conclusions of law was set forth by this court in Koch Development

Corp. v. Koch as follows:

When a trial court enters findings and conclusions, we apply a two-tiered standard of review: we first determine whether the evidence supports the findings; we then determine whether the findings support the judgment. In deference to the trial court's proximity to the issues, we disturb the judgment only where there is no evidence supporting the findings or the findings fail to support the judgment. We do not reweigh the evidence, and we consider only the evidence favorable to the trial court’s judgment. We also will not reassess witness credibility. The party appealing the trial court’s judgment must establish that the findings are clearly erroneous. Findings are clearly erroneous when a review of the record leaves us firmly convinced that a mistake has been made. We do not defer to conclusions of law, which are evaluated de novo.

996 N.E.2d 358, 369 (Ind. Ct. App. 2013) (citations and internal quotation

marks omitted), trans. denied.

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I. Damages for Diminished Value

[8] Shield first argues that the trial court erred as a matter of law by concluding that

Indiana does not permit the recovery of inherent diminished value of personal

property, what the trial court referred to as “stigma” damages. The parties agree

that the applicable law was set forth in the case relied on by the trial court,

Wiese-GMC, Inc. v. Wells, which summarized the law of damages as follows:

[T]he fundamental measure of damages in a situation where an item of personal property is damaged, but not destroyed, is the reduction in fair market value caused by the negligence of the tort feasor. This reduction in fair market value may be proved in any of three ways, depending on the circumstances. First, it may be proved by evidence of the fair market value before and the fair market value after the causative event. Secondly, it may be proved by evidence of the cost of repair where repair will restore the personal property to its fair market value before the causative event. Third, the reduction in fair market value may be proved by a combination of evidence of the cost of repair and evidence of the fair market value before the causative event and the fair market value after repair, where repair will not restore the item of personal property to its fair market value before the causative event.

626 N.E.2d 595, 599 (Ind. Ct. App. 1993) (emphases added), trans. denied.

Although the parties agree that this language controls, they disagree on the

precise meaning of this language and how it applies in the present case. This, of

course, is a question of law that we review de novo. See Koch, 996 N.E.2d at

369. [9] Shield argues that, under Wells, damages for diminished value are recoverable

whenever an item of property suffers a decrease in fair market value despite

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being fully repaired. Forster argues that there is no diminished value when the

property is fully repaired. The trial court concluded that Shield’s claim for

inherent diminished value, what it referred to as “stigma of defect” damages, is

not recognized in Indiana law for property which is not permanently damaged.

We believe this misreads Wells. [10] The Wells court did not hold that diminished value damages are recoverable

only when the property is permanently damaged. Instead, it held that

diminished value damages are recoverable when “repair will not restore the

item of personal property to its fair market value before the causative event.”

Wells, 626 N.E.2d at 599. We read this to mean that, even if the repair restores

the property to its previous condition, damages may still be recovered if there is

a resulting loss of fair market value to the property as a result of it having been

damaged and then repaired. [11] Our reading of Wells comports with the economic reality that property that has

been damaged and repaired often has a lesser fair market value than property

that was never damaged in the first place. This is especially true in the case of

automobiles, where numerous online services, including Carfax, allow anyone

to easily check to see if an automobile has been involved in an accident.

Automobiles that have been involved in accidents, even if they have been

successfully and fully repaired, usually have a diminished value. Indeed, all

other things being equal, few if any would prefer a car that has been in an

accident, even if fully repaired, to one that has never been in an accident, unless

the repaired car was available at a lower price.

Court of Appeals of Indiana | Opinion 19A-CC-1100 | February 19, 2020 Page 6 of 9 [12] As stated in Wells, “the fundamental measure of damages in a situation where

an item of personal property is damaged, but not destroyed, is the reduction in

fair market value caused by the negligence of the tort feasor.” Id. The cost of

repair is an adequate measure of damages only when the repair restores the

property to its fair market value before the damage. Id. In cases where the repair

will not restore the property to its pre-accident value, the reduction in value

may be proved by a combination of evidence of the cost of repair and the

difference between the fair market value of the property before and after the

accident. Id. [13] Because the trial court erred regarding the applicable law, we could reverse on

this ground alone, as the court viewed the evidence from in incorrect legal

perspective. But the trial court, in our opinion, also clearly erred with regard to

the evidence of damages submitted by Shield.

II. Proof of Diminished Value

[14] Shield also argues that the trial court clearly erred by concluding that Shield

failed to prove that the repairs to the Truck did not restore the vehicle to its fair

market value before the causative event. We agree. [15] First, the trial court clearly erred when it found that Raskin, Shield’s third-party

appraiser, “did not inspect the vehicle, review photos of the vehicle, or in any

way assess the actual condition of the vehicle.” Appellant’s App. p. 12. Raskin’s

uncontradicted and unchallenged testimony shows that he reviewed several

photos of the Truck. He also assessed the condition of the Truck by referring to

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the insurance company’s repair estimate and two different vehicle history

reports, one of which included the Truck’s service history and odometer

readings. Thus, Raskin based his appraisal of the Truck’s fair market value on

the vehicle’s maintenance records, mileage, repair estimates, and photographs

of the Truck. [16] It is notable that the trial court did not find Raskin’s testimony to be

uncreditworthy. It instead concluded that Raskin’s testimony was not

persuasive because he did not personally “inspect the vehicle, review photos of

the vehicle, or in any way assess the actual condition of the vehicle as a result of

the accident.” Id. The trial court’s conclusion that Raskin did not review photos

of the vehicle is clearly erroneous. Nor do we with think that Raskin was

required to personally inspect the Truck in order to appraise it. As noted,

Raskin reviewed several documents and reports regarding the vehicle in coming

to his appraisal conclusion. [17] Even if the trial court was not persuaded by Raskin’s testimony regarding the

diminished value of the Truck, its conclusion that there was no evidence

regarding the diminished value of the Truck is contrary to its own finding that

Shield’s in-house appraisal concluded that the Truck had a diminished value of

$4,020.50. We therefore conclude that the trial court’s factual findings

regarding Raskin’s appraisal are not supported by the evidence. And the trial

court’s conclusion that Shield presented no evidence to support its claim of

diminished value is unsupported by the trial court’s factual findings.

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Conclusion [18] The trial court erred by concluding that Shield could not recover damages for

diminished value because the Truck had been successfully repaired. It then

compounded this error by ignoring the uncontroverted evidence that the Truck

had a diminished value as a result of being involved in an accident and being

repaired. We therefore reverse the judgment of the trial court and remand for

proceedings consistent with this opinion.

Kirsch, J., and Bailey, J., concur.

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