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Does Nevada Recognize A Claim Of Diminished Value?

It just so happens that last week, I got a telephone call from two adjusters at the same insurance company asking me this question.  I told them both I was confident that Nevada recognized diminished value claims.  But I decided that I would go back, take a look into my research and reconfirm how it is that I was confident that there was recovery for “diminished value” in Nevada.  Here is what I found.

Diminution of Value

Normally, when someone asks me, “What is the state of the law on a particular topic?”, I often start by looking at the Nevada Pattern Jury Instructions.  Although these pattern instructions are not infallible, they were written by a committee of experienced attorneys who have run into similar issues.  If there is no precedent, the instructions are something of a consensus as to what the rule of law ought to be.  If there is no precedent and a trial were held today, chances are better than 95% that a judge would use these instructions to tell the jury what the law is.  Here is what I found.

The Nevada Pattern Jury Instructions give four methods to calculate damage to be paid to plaintiff for loss of property:

1.    If the property has no market value after the loss, then the amount paid to plaintiff would be the fair market value of the property before it was destroyed.  NPJI 10.10

2.    If the property can be repaired, but the repairs will cost more than the fair market value, then the amount to be paid will be the fair market value prior to the loss.  NPJI 10.08

3.    If the repairs will cost less than the fair market value and the repairs will fully restore the value of the item, then amount to be paid is the costs of the repairs.  NPJI 10.08

4.    Finally, if the repairs will not fully restore the value of the property, then amount paid is the difference between pre-loss fair market value and post-repair fair market value, plus the costs of repairs.  NPJI 10.09

The next question is whether there are there any precedent setting cases that have considered the issues raised by these instructions?  The answer is yes.  The Nevada Supreme Court took up some of these issues in the case of Dugan v. Gotsopoulos, 117 Nev. 285, 22 P.3d 203 (2001).   In that case, a property owner sustained damage to her car.  She didn’t have money to get it fixed.  She drove it around for a while but ultimately had to sell it for scrap.  When trial came, the Plaintiff wanted to introduce evidence of the costs of the repairs.  But the trial judge wouldn’t let her do so until she had demonstrated that the cost of repairs was less than the fair market value.  She wanted to say what she thought the car was worth.  The trial judge wouldn’t let her.  She wanted to introduce the Kelley “Blue Book” as evidence of the fair market value.  The trial judge wouldn’t let her introduce that either.

When that case went up on appeal, the Nevada Supreme Court said that a property owner may testify as to what they think the fair market value of their property is.  A property owner can also introduce evidence of fair market value using “market quotations, tabulations, lists, directories or other published compilations, generally used and relied upon by the public or by persons in particular occupations”  i.e. Kelley Blue Book.  In the end, the Nevada Supreme Court did not comment on all of the instructions set out above.  However, they did say that the trial court “abused its discretion by failing to permit Dugan to present evidence about both the value of her car before and after the accident”.  Although “diminished value” was not directly the issue in the case, this statement tells me that the Nevada Supreme would allow a claim for “diminished value” and that such a claim would be relatively easy for a plaintiff to prove.

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Michael Mills About Michael Mills

Mr. Mills practices in the area of civil litigation and appeals, with particular experience in matters involving trucking liability, insurance defense, insurance coverage, premises liability, products liability and defense of personal injury. Mr. Mills is a member of the Trucking Insurance Defense Association, the Defense Research Institute Trucking Committee and the Nevada Motor Transport Association. Mr. Mills is licensed to practice before the Nevada Supreme Court and the Utah Supreme Court. He is also licensed to appear before the United States Supreme Court, the U.S. District Courts for the Districts of Nevada and Utah, as well as the U.S. Court of Appeals for the Ninth Circuit. Mr. Mills has created 3 Blogs for the benefit of the insurance industry. He serves as editor and publisher of the Nevada Insurance Law Blog, the Nevada Coverage and Bad Faith Blog and the Nevada Trucking Law Blog.

 
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