The Florida Supreme Court, in MCI Worldwide v. Mastec, 995 So.2d 221 (Supreme Court of Florida, July 2008), floundered to an awful decision based not on Florida law but on underground cable cases from Ohio and Virginia. This court sent an answer back to the Eleventh Circuit saying that loss of use could not be recovered unless the claimant could show lost revenue. The effect is that loss of use in Florida now becomes loss of revenue, and the ability to prove lost revenue is far greater than the ability to prove loss of use.
Remedies for Recovering Loss of Use
Private auto carriers are already denying loss of use claims by car rental companies based on the MCI case. Claims adjusters are pushing harder than ever to force car rental companies to submit utilization statistics. So how are car rental companies going to recover loss of use in this climate? My suggested technique involves:
• Understanding the MCI case. In a dissenting opinion in the Florida Supreme Court case, Judge Lewis articulated clearly that lost revenue or lost profits have never been conditions precedent to recovery of loss of use in Florida. He scolded the court for ignoring decades of Florida law and for relying on cases from other states to reach its decision. Car rental risk managers should read the dissent. It is available online at www.laplacalaw.com/MCIcase and at www.rentalclaims.com/MCIcase.
• Taking the position with an auto insurer claims adjuster that the MCI case applies only to underground cable cases. The cable cases from Florida, Virginia and Ohio involved really bad facts—specifically the outrageous loss of use claims by cable companies for huge sums that would have resulted in windfall profits. Courts were inclined from the outset to decide against the cable companies. Car rental losses are far different with established law favoring recovery of loss of use costs.
• Inserting a definition of loss of use in rental agreements that is not dependent on lost revenue or lost profits and having the renter promise to pay loss of use as the rental company defines it. If the insurer refuses to pay, the rental company can file suit against the renter for breach of contract.
Until a Florida court recognizes in a future case that the MCI decision should not apply to car rental claims, car rental companies and their TPAs are going to have to cope with this string of unfavorable cases.
This article was written by Michael LaPlaca, senior member of LaPlaca Law, PC, a law firm in the Washington, D.C. area that specializes in car rental and franchise law. Contact LaPlaca at Michael@LaPlacaLaw.com.