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Analysis: The Tennessee Court of Appeals in DKB Trucking Company, LLC v. JNJ Express, Inc., No. M2012-00008-COA-R3-CV, 2012 WL 3866462 (Tenn. Ct. App. September 5, 2012) discussed the appropriate damages for the loss of a tractor and trailer when the replacement could not be put into service quickly (the principles in this case could apply to other commercial vehicles as well). In this case the plaintiff's tractor and trailer were completely destroyed in a collision caused by the defendants. DKB Trucking at 1. The plaintiff's tractor and trailer were licensed by the federal government and the Commonwealth of Virginia to haul hazardous materials. DKB Trucking at 1. Proof at trial established the value of the tractor and trailer was approximately $45,000.00. DKB Trucking at 1. Proof also showed that the plaintiff replaced the trailer but did not replace the tractor even though there were four similar tractors available that could replace the destroyed tractor. DKB Trucking at 1.
The hauling of hazardous materials is heavily regulated and each of the DKB tractors were required to have proper licensure, permits and placards. DKB Trucking at 1. The process of obtaining these documents can take up to three months. DKB Trucking at 1. DKB also provided testimony that the average revenue earned by the truck that was destroyed was $3,700.00 per week. DKB Trucking at 1.
The jury found the defendant liable for the value of the tractor and trailer and awarded damages of $45,000.00. DKB Trucking at 1. The jury also awarded the plaintiff $44,000.00 for loss of use and lost profits due to the destruction of the truck. DKB Trucking at 1. The trial court disagreed with the verdict and issued a directed verdict finding the plaintiff could not recover for the loss of use or loss of profits in this case. That issue was appealed.
The Tennessee Court of Appeals noted the general rule in Tennessee is that "lost profits are not recoverable when the plaintiff's personnel property has been completely destroyed and is not capable of being repaired." DKB Trucking at 2. (citing Tire Shredders, Inc. v. ERM-North Cent., Inc., 15 S.W.3d 849, 855 (Tenn. Ct. App. 1999)). However, the court also noted that "we recognize that a plaintiff may recover damages for loss of use or lost profits when the plaintiff's personal property has been negligently destroyed by the defendant and the property cannot be replaced within a reasonable period of time" DKB Trucking at 2. (citing Tire Shredders, Inc. at 857).
As a result, the key question in this case was not simply whether the plaintiff could have simply replaced the tractor because the evidence showed the tractor could be replaced almost immediately. Rather, the important question was whether the tractor was actually "replaced" by the mere purchase of a subsequent tractor. DKB Trucking at 3. The court found that a newly purchased tractor in this circumstance could not be used to haul hazardous waste until it met federal and state guidelines and therefore was not effectively “replaced”. DKB Trucking at 3. The unrebutted testimony was that this process would take approximately three months. As a result, the simple fact the tractor could be replaced immediately did not mean the plaintiff was not entitled to damages for loss of use or lost profits because it could not be used to haul hazardous materials. DKB Trucking at 3. The court found that under these circumstances damages for loss of use or lost profits are recoverable for the reasonable amount of time that it took to put the replacement tractor into service to haul hazardous waste as opposed to simply being “replaced”. DKB Trucking at 1. The directed verdict granted by the trial court was reversed and the original jury verdict award was reinstated.
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