Purco v. Koenig and Its loss of Use Implications

Recovery of loss of use damages is an important part of the lives of car rental companies and of the industry’s loss recovery experts.

“Especially these days, every company nationwide is seeing increased utilization,” says Jim Maher, vice president of Midwest Car Corp., a franchisee of National Car Rental and Alamo Rent A Car based in Kaukauna, Wis. “By the time you get [the damaged car] parked, handled, get the estimate written and the parts in, it could be two weeks out of the fleet for repair. We’re averaging 80 percent utilization. That could be eight days down, right there.”

“Any owner will tell you the harm they incur goes beyond the mere physical damage to the car,” says David Purinton, owner and president of PurCo Fleet Services Inc., a risk management company specializing in car rental loss prevention. “They have also lost the use of the car, and they have the administrative hassle of having to deal with getting estimates, getting the car repaired, shuffling the car around, working with the body shop, often having to sell the car at auction or in a buyback, and numerous other details; not to mention trying to establish the amount of the claim as well as working with the party who damaged it and their insurance companies to recover for the losses.”

PurCo has litigated numerous car rental cases, including PurCo Fleet Services Inc. v. Judith Koenig, a recent Colorado Court of Appeals decision. The Court reversed a lower court decision that had ruled PurCo could not recover loss of use damages or administrative fees, concluding that in Colorado, car rental companies are entitled to recover loss of use and appropriate administrative fees.

How did the Court arrive at this decision and what are the implications for the car rental industry?

The Accident and the Trials

On September 13, 2005, Judith Koenig rented a car from the National Car Rental licensee at the Durango Airport in Colorado. While driving the car, she hit a deer and damaged the vehicle.

PurCo, the damage recovery company working with the National licensee in Durango, demanded payment from Koenig for the damage, as well as loss of use damages and a contractual administrative charge. Koenig’s insurer paid for the damage to the car, but refused to pay PurCo for loss of use or the administrative charge. PurCo then filed suit to collect the unpaid amounts.

The Trial Court denied PurCo a trial, ruling that no loss of use damages could be recovered under Colorado law in the circumstances of this case. The Court also ruled for Koenig, dismissing PurCo’s administrative charge claim.

PurCo appealed the decision. The Appellate Court concluded the Trial Court had erred in its ruling when it denied PurCo its loss of use and administrative charge claims.

The Court did not rule that PurCo had in fact incurred loss of use damages or determine an amount; however, it sent the case back to the Trial Court and granted PurCo the right to a trial to determine this. The ruling in this case gives guidance on how to assess loss of use damages and an appropriate award amount in Colorado.

CONTINUED:  Purco v. Koenig and Its loss of Use Implications
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  1. Barbara Updegraff [ August 14, 2012 @ 10:28PM ]

    After several years of trust and commitment to Enterprise Rental Agency following the exclusive use of this company by my previous employer I found their current rental practices to be deceptive and unethical. I rented a car at the Boseman, Montana airport. When I chose not to take out their auto insurance for any car damage since our auto insurance agency covered all damage to the car in case of an accident or other damage to the rental car, the agent questioned my choice. She asked if I understood that I would be responsible for "all damage to the car including possible hail damage given the time of year." I had already checked with our insurance agent regarding this matter. No other information was given by this agent. When hail damaged the rental vehicle one hour before it was returned we believed it was covered by our insurance company and IT WAS. However, we were informed by a strong-armed representative from PURCO, their collection agency, that we owed an additional $7,000 for loss of resale value due to the damage of the car from hail damage, the maximum 30
    day "loss of use" rental amount and one other obscure fee. NONE OF THIS WAS SHARED VERBALLY BY THE RENTAL AGENCY REPRESENTATIVE AT THE TIME OF RENTAL. She simply included the contract along with our payment receipt AFTER singing the contract and sending us on our way. I have since read hundreds of similar complaints from unsuspecting renters who trusted the limited verbal company "line" from counter representatives. Beware of Enterprise (who has now also purchased National Car Rental) regarding the deceptive disclosure practices at the rental counter that likely makes them millions of dollars a year with unsuspecting customers.

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