PurCo Fleet Services has achieved another litigation victory when it comes to loss-of-use and administrative fees.
On Jan. 2, the district judge in PurCo v. Koenig ordered renter Judith Koenig to pay PurCo $247,890 in attorney’s fees and $11,120.25 in litigation costs for prevailing on its claim of $378 in loss-of-use damages and a contractual administrative fee. These amounts represent the fees and costs incurred by PurCo in the suit.
This order comes after the Colorado Supreme Court ruled in favor of PurCo on its loss-of-use claim, holding that loss of use is an intrinsic loss when a rental car is damaged. In doing so, the Colorado Supreme Court rejected the argument of Koenig and her insurance carrier State Farm that loss-of-use damages could only be shown by proving actual lost profits.
The reported decision is heralded in the rental car industry as a turning point for defining loss-of-use damages in the rental car context.
The Colorado Court of Appeals previously ruled that administrative fees could properly be charged when the contract called for them. That decision was not appealed further.
“This is yet another vindication of the straightforward, law-based approach PurCo has taken to recovering loss-of-use damages and contractual administrative fees,” said David Purinton, president of PurCo. “There comes a point in time when State Farm and carriers like it need to honor contractual commitments, plain and simple.
“It is gratifying to see the courts enforce the rental contracts as written. And it highlights the importance of rental car agencies having good contracts and knowing how to enforce them when needed,” added Purinton.
In the new ruling, the court noted that “the amount in controversy was miniscule when compared to the amount of attorney’s fees sought.” However, the court found that the desire of State Farm was “to set a state-wide precedent (and potentially use this case as persuasive authority in other states) regarding the need to prove actual lost profits …”
Coupled with State Farm’s defenses and counterclaims, it “greatly increased the amount of attorney’s fees and costs that would have otherwise been incurred.” The court noted that “[t]he case was made extremely complex by the actions of State Farm and lasted seven years.”
Moreover, “[t]he attorney’s fees incurred by PurCo will be of continuing value to PurCo in the coming years when similar incidents invariably occur with customers of [the rental car agency], both in this state and other states.”
The court rejected Koenig’s argument that PurCo had not received a valid assignment from its client, the rental car agency. The court held that Koenig and State Farm had no standing to challenge the assignment, and even if they did, the claim was clearly assigned in light of the actions by both PurCo and its client.
“The egregious thing about the Koenig case is that Judith Koenig was willing to pay the damages until her insurance carrier advised her not to,” said Purinton. “And that was even though she had purchased coverage for just such damages.”
“Needless to say, it’s the height of unfairness for an insurance company to charge its customers premiums to cover loss-of-use damages and administrative fees and then argue such damages shouldn’t be recoverable. I think the court has laid that notion to rest,” added Purinton.
This most recent award of attorney’s fees and costs comes on the heels of PurCo’s receiving all its attorney’s fees and costs in a separate litigation against a different State Farm customer.
In PurCo v. Horn, the court awarded PurCo attorney’s fees of $72,843 and costs of $2,640.59 for prevailing on its claim of $301.60 in loss-of-use damages and a contractual administrative fee. State Farm paid that judgment in full.