AutoMuse®

Checking up on George Wallace’s Declarations and Exclusions blawg (California insurance and professional liability law), his “new voices” entry sent me surfing over to Professor Shaun Martin’s California Appellate Report in which Martin discusses an unpublished appellate decision reprimanding attorneys for bad lawyering.

What struck me as interesting is that Professor Martin repeatedly talks about how a $20,000 conflict is too small to entice good lawyers to take the case and, perhaps, justifies some corner-cutting on the part of the attorneys. In the wake of incessant commenting on tort reform and why we need caps on non-economic damages (because it was too much of an incentive for lawyers to take cases), I thought his comments were instructive.

So what kind of a legal system do we have? Tort reform is often designed to cap recovery, and, therefore, will discourage top lawyers from taking tort cases. On the other hand, cases in which the economic recovery is low will discourage top lawyers from undertaking representation as well. Which means that the only time you will have the best attorneys working on client matters will be for large businesses that have potential economic losses in the millions and billions of dollars. Ok, as a tiny offset, we’ll have the occasional brilliant, yet altruistic, attorney who takes small cases and the grumbling big firm associates who get legal aid cases foisted upon them.

Which brings me to my heading. Third party diminished value losses typically run in the $2,000 - $3,000 range. Most attorneys won’t touch the property loss portion of a car accident case for a number of reasons, the top of which is that it is simply uneconomical and inefficient to try to recover the diminished value. Insurers know this and often rely on the fact that they can stonewall a third party claimant and refuse to pay a perfectly legitimate claim because the claimant really has no recourse but to file a lawsuit. If the claimant does file suit on a $2,000 - $3,000 claim, it will probably be pro se in some version of small claims court.

Are insurers afraid of that? Heck no. So they lose the case and pay the diminished value. They still have avoided paying diminished value on hundreds of other claims that were never filed because the claimants just didn’t have the heart, knowledge, or ability to sustain the fight. (Of course, there are those insurers and claims representatives who do pay documented third party diminished value claims.)

Professor Martin notes that there is an economic reason that may be some excuse for corner-cutting on a $20,000 matter. But what about the small diminished value loss that matters just as much to an individual claimant, but who can’t even get a bad lawyer interested? Talk about a need for legal reform.

Insurance is just one of thoses subjects that doesn’t lend itself to being covered by reporters and editors who lack law and/or economics degrees. Despite his weakened condition, Walter Olson at Point of Law rallied himself sufficiently from a flu relapse to take the New York Times to task over its confusing and contradictory article on medical malpractice insurance. I like the fact that both Martin Grace and Olson describe the article (I’m paraphrasing here) as not being completely wrong. Their criticism is sharp and analytical, and I am always interested in what they have to say. Why doesn’t the NYT just pay them to write the articles?

This is actually a pet peeve of mine. I hate it when amateurs, particularly widely read amateurs, write on topics they are simply not equipped to cover. I spend lots of time correcting foolish and unsupportable reporter statements about diminished value decisions and the alleged “law” of any given jurisdiction on that topic to know how maddening it is.

Now, if I can just get these guys to agree with me on automobile diminished value issues, I’ll turn them loose on those unsuspecting reporters.

Against all of my moral inclinations, I like this truck. It is square and solid, and I feel perfectly in control as I lumber down the road in my urban assault vehicle. Sorry, AM General, that’s what it is, particularly as the one I am driving is olive green. OK, so it has the pearlized metallic finish paint – it’s still olive green, which makes it an army vehicle in my book.

Which, of course, was what the original Hummer was built to be. Just like so many other products that are designed for the army or use in space, they become cool when we bring them to the mainstream. I remember the introduction of Tang – a product my Mom would never let us drink because she saw no reason to substitute good old orange juice for some chemically created stuff. I figured, if it was good enough for the astronauts, it was good enough for me. After all, look at Velcro. Where would we be without that amazing stuff?

But the H2 carries its own mystique. Part armored car, part James Bond mystery machine, this thing just looks like it’s carrying state secrets to some rendezvous. Yet, the real appeal for drivers is the surprising roominess inside. After driving this vehicle, you understand why football and basketball players favor them. I’m tall, but in the H2 with the seat lowered, I had a good six inches of headroom to spare, to say nothing of the abundant leg room.

The seats are square, padded command posts from which you can survey the landscape. Everything about this UAV is square – from the external styling to the interior. The shift is a right-angle handle which feels like you are powering up an airplane when you put it in gear, and it corresponds to the, albeit flimsy plastic, door handles.

The H2 has the smoothest, most stable ride of any of the larger SUVs I have driven. Better than the Escalade, Navigator, Yukon, you name it. Its visibility is also surprisingly good, because, from the outside, it looks like you have the equivalent of a machine gunner’s slit to see through. The H2 also comes with a 3 year/36,000 mile warranty that even covers the tires.

I cringed over the oxymoronic “fuel efficiency” reading of 11.5 miles per gallon, did some quick math (OK, I got out the calculator to check), and choked when I realized that this vehicle had already consumed 1,000 gallons of gas in its young life. (It reminds me of the way a teenage boy can suck down a gallon of milk directly from the jug while pondering the “what to consume next” contents of the refrigerator.) For those lucky enough to be the Governor of California, you can drive the experimental H2H. The hydrogen Hummer is GM’s poster child for the environmentally conscious, and His Royal Schwarzeneggerness is the lucky guy who gets to buzz along in the laser blue specialty vehicle.

This truck has no appreciable pick-up, which is fine considering that acceleration would probably send the fuel efficiency to 4 mpg. So, don’t go championing the highway unless you expect your size to intimidate the would-be road hoarders. It also has a good bit of pedal travel in both the accelerator and brake before you feel them engage.

As I’ve said, the H2 is a big vehicle. It squeaked into my garage with about an inch of clearance. I held my breath while easing it in, as if that might really help. I think the most inconvenient feature of the H2 (besides needing a step ladder to get into it) is the location of the rearview mirror. Your arms have to be about eight feet long to adjust it – which is fine if you are a ball player with a wingspan that wide – but not when you are my 5’6” mother. She actually had to pull over and unsnap the seat belt to get close enough to reset the mirror.

I typically try to have Mom test drive whatever it is that I am currently driving, because it gives me a different perspective on features of the vehicle. It’s always entertaining watching her climb into a truck like she’s scaling Everest. But once inside, Mom’s all business. Good news for you, AM General, Mom likes the H2. Although hating the lack of fuel efficiency as much as I do, she admires the stability and fluid ride the H2 has to offer. Her exact comment was, “I could get used to this one.”

A definite thumbs up from Mom, which is something Tang never managed to achieve.

Attributes:

Olive green out
Cream leather in
Navigation
OnStar
XM radio
Luxury package
Adventure package
Moon roof
Leather package
Outside spare
Air ride suspension
Load leveler
Heated seats
Roof rack
11,500 miles

After a very spirited debate at Loic Le Meur Blog der auto blog has changed its name to das auto blog. Why? Because there appears to be conflict within the Deutsch speaking public as to whether blog is masculine or neuter.

Proponents of “das” cite to the fact that web and log(buch) [log book for the rest of us] are both introduced with the article das. Therefore, the contraction blog should be das as well. Apparently, however, there are many Germans who prefer “der” as the article of choice for blog — according to one participant in the debate, about 1/3 of bloggers.

Although there has been no official pronouncement on the German gender of Blog, DUDEN, a German dictionary publisher unofficially prefers the neuter article “das” for weblog. I never thought I would be grateful to English for anything, but I am happy to know that English speakers can make up words at will without worrying about what gender they may be.

So let’s go back to my post of February 10, 2005, “Blog is Masculine“. Well, I guess I have to revise that to say that blog is masculine in French, and we think maybe it is neuter in German, but we won’t know about that until the fat lady sings. (But… will she be singing Wagner?)

I ran across this great little letter to the editor of Automotive News in the February 14, 2005 edition:

The Jan. 24 article concerning speculations abouth BMW’s plant in Spartanburg, S.C. (”BMW line could add 3rd model”), said BMW’s global production chief, Norbert Reithofer, “has said he would like to see the next generation X3 built in Spartanburg.”

Jochen Mueller
Corporate Communications
BMW Group
Munich, Germany

I never met a German who didn’t have the ability to say exactly what he/she meant. But I like the part where Herr Mueller says: That is incorrect. His [Reithofer’s] correct answer was …

This reminds me of a deposition I took once in which the plaintiff would answer, “No”, to questions like, “Have you been injured in any way?” and her lawyer would jump in and say, “She means yes.”

As always, the RiskProf brings to the fore an important point about Avery: It’s a mutual fund insurer, so the $600 Million award of punitive damages to insureds simply comes out of their own pockets. The Avery court, however, appears to have made a distinction between management and employees as opposed to insured/shareholders. Not that such a distinction would affect who ultimately pays the judgment, but there clearly seems to be a distinction in the court’s mind between these two groups on the propriety of the company’s behavior. Interestingly, the court’s distinction is echoed by State Farm’s own behavior when it treated employees and special friends of SF executives better than it treated its insured/owners.

If anyone wants to delve into the specifics of the case, you can read actual discovery documents produced on the Princeton Auto Body website. Some of my favorites:

The December 5, 1990 SF memo on the aftermarket parts guarantee;

July 2, 1992 letter from SCRS to Ford on lack of quality in replacement parts;

the February 3, 1993 letter to CAPA from the Automotive Body Parts Association;

the September 11, 1990 Detroit Testing Labs “It Ain’t Working” memo;

the June 25, 1997 letter from ASA to CAPA on bodyshops tired of being the guinea pigs; and

the April 6, 1990 “Destroy All Your Copies of Prior Claims Manuals/Handling Procedures Before We Get Another Bad Faith Claim Subpoena or Production of Documents Request” memo.

Discovery can be so entertaining.

Avery v. State Farm Mutual Automobile Insurance Co., 321 Ill. App. 3d 269, 746 N.E.2d 1242, 254 Ill. Dec. 194 (2001), appeal allowed, 201 Ill. 2d 560, 786 N.E.2d 180, 271 Ill. Dec. 922 (2002)

Martin Grace, The Risk Prof, and Evan Schaeffer are having an interesting discussion about the proposed federal class action bill. Martin used Avery v. State Farm Mutual Automobile Insurance Co., 321 Ill. App. 3d 269, 746 N.E.2d 1242, 254 Ill. Dec. 194 (2001), appeal allowed, 201 Ill. 2d 560, 786 N.E.2d 180, 271 Ill. Dec. 922 (2002),
as an example of how class actions brought in state courts can improperly impose liability under one state’s law to actions or contracts created under a different state’s laws.

The concept is understandable, however, I think Avery was not the best case to make the point. Avery was a case involving breach of an insurance contract. What got State Farm in trouble and allowed the Illinois court to comfortably certify a class action was the fact that State Farm was accused of representing and promising its insureds in the insurance contract that repair of their vehicles using less expensive “aftermarket” (non-original equipment manufacture) parts would be of “like kind and quality” as the OEMs and would restore the insureds’ cars to “pre-loss condition”.

The testimony in Avery — particularly from collision repairers who actually fix the cars — was that the LKQ parts were not equivalent to OEMs, often had to be retro-fitted, and sometimes were dangerous. For example, some aftermarket hood latches have been known to spontaneously release or fail while you are driving down the road, causing the hood to whip up into windshield and block your vision. (Oh, you can’t see? But that hood was cheaper!) The decision found that SF was breaching the insurance contract in that the aftermarket parts were inferior to OEMs, and, therefore, SF could not claim to be restoring insureds’ vehicles to “pre-loss condition” as promised in the policy.

My article, “Awaiting Avery and the Fate of Aftermarket Parts”, explains the bigger problems SF faced in this trial than trying to convince people to use aftermarket parts. What created the public relations nightmare for SF was the evidence presented at trial that, while average insureds were told by SF how terrific and equivalent these parts were (and were forced to accept them), SF employees, elite insureds, and “special friends” of SF executives had their cars repaired with OEM parts.

It’s rather difficult to say with a bold face, “These parts are great, of like kind and quality, and you won’t have any problems with them”, when you refuse to use them yourself. It’s like something one of my dealer friends always says when claims representatives try to tell him how safe a clipped vehicle is and that there has been no diminished value as a result of the accident and repair. His response? “That’s just fine. Why don’t you send your wife or daughter over and I’ll sign her up for 60 payments at the full retail price.” Funny. He’s never had a single taker.

But that’s not all. Probably the meanest thing SF did to its insureds with the aftermarket parts was its response to the promise that it would replace, at no cost to the insured, any aftermarket part with which the insured had a problem. When insureds had problems with the non-OEM parts and they contacted SF to make good on the replacement promise, SF told them they had to get the part replaced by the manufacturer under the manufacturer’s warranty. Most aftermarket manufacturers, however, are located in Taiwan, Korea, or elsewhere in Southeast Asia, creating a complete nightmare for the insured to try to get the part replaced. Besides, SF had told insureds SF would replace the problem part. To turn around and force unsuspecting insureds to stay up until 2:00 a.m. to even talk to someone in Korea about the problem was absurd. In this the Avery court agreed stating that SF’s promise was illusory.

Fantasy promises. What would happen if we all just “promised” to pay our premiums but didn’t? Right. We know what would happen. SF would cancel our insurance. So, what’s wrong with making SF step to the plate? Besides, making fake promises just isn’t very neighborly.

According to the Port Clinton News Herald, the owners of the MORVA, a 57 foot cutter built in England in 1938, are suing to recover damages suffered when 20-30 feet of the 78 foot mast were shattered during transit. One of the types of damages the owners are trying to recover? You guessed it. Diminished value.

Inherent diminished value. Not just for cars, but for all personal property.

It’s official. Now that I found der auto blog, a German language car blog to go along with le blog auto, it’s been confirmed: “Blog” is a masculine noun.

I have always wanted to know how languages that assign genders to their nouns go about deciding which gender a new word will be. Is there some official government department acting as the gender police, deciding that some words are inherently male, female, or neuter? Someone help me out here.

The very first thing I want to say about this car is that it flies. Driving down the road I just get this urge to stamp my foot all the way down on the accelerator and feel the car jump forward and rocket off into the sunset. Unfortunately, the police tend to frown on that kind of behavior — especially in a 25 mph residential zone — but, hey, an urge has no zone propriety.

The Corvette engine in this car makes everything about its performance shine. It is agile, accelerates with the slightest touch, and maneuvers around traffic like everyone else is standing still. Even with 11,000 miles, this car handles like it is brand new. The six speed manual transmission makes you feel you are in complete control of this vehicle and it is an absolute joy to drive — if you can drive standard shift. If not, it would be total agony to watch (and hear) a novice cutting up those perfectly meshed gears. Because it’s a Cadillac, however, I forget the CTS-V is standard shift, and I keep hopping into the car and wondering why the engine won’t turn over, as I have my foot on the brake. Duh. Foot on the clutch, please.

There is no comparison between the CTS and the CTS-V. The CTS feels like a sluggish old lady in contrast to the CTS-V. If you are thinking of buying a CTS, can drive standard shift, and like a car that responds to your every whim, buy the V engine model.

In this car, I have XM radio to keep me busy and navigation — not getting lost here. The seats are a luscious leather/suede two-tone and they couldn’t be any more comfortable if they tried. Front vision is good; back and sides could offer better sight lines.

But there is that nagging thing with Cadillacs — I just can’t get past their design. Generally, I am a big fan of sharp lines and edges, but the CTS looks like its a trapezoidal puzzle trying to fit together. It’s got that short rear and trunk angle that makes it look like a reverse bulldog. And the trunk lid is so heavy that it could seriously discourage women from buying it. Trying to open the trunk is hard enough, but trying to do it with an arm full of groceries, books, fertilizer, briefcase, a toddler? For most women, it will never happen.

While I like the spare interior, I object to the idea of paying thousands of dollars for molded plastic. It just goes against the grain. I expect to see a wood-ornamented dash, not gritty plastic squares like the bottom of the floor mats. If the CTS-V wants to command the price Cadillac sets and compete with BMW, Mercedes, Jaguar and Audi, it better come dressed for the party. And, if Cadillac really wants to sell a $100,000 model, it better check the molded plastic at the door.

Attributes:

Silver out
Black leather/suede in
Moon roof
XM Radio
Navigation
Heated seats
6-speed manual
Power everything
11,000 miles

I’ve received a number of emails and comments posted here grumbling about the access to the showcase cars on Saturday. Barrett-Jackson limited access to the prime cars on Saturday to bidders only — therefore, anyone in possession of a $50 general admission ticket was prevented from seeing the best cars up close and personal. I decided to check out this complaint with Barrett-Jackson to see if this was an auction policy, if it applied on other days and I was simply unaware of it, and if not a new policy, what happened to restrict access to the cars?

Apparently, access to the cars was restricted on Saturday, but not for any of the reasons suggested to me. According to Barrett-Jackson designated spokesperson, Scott Black, “Access to the showcase cars was restricted on Saturday because of the rain.” The prime cars were available for general viewing on all of the other sale days (I checked them out on Wednesday and there were lots of general admission spectators with me at the time), but the storm that blew in and the rapid drop in temperature forced spectators and participants inside the tent. (I was standing outside when the temperature plunged about 12 degrees and the black sky started throwing rain on everything.) Because there were so many people trying to take cover, “People were squeezing in between the cars,” said Black, and “It became an issue of safety for the people and the cars.” He also confirmed for me that this restriction was an isolated incident, “Strictly because of the weather and the enormous number of people.” It is not an auction policy, nor is the limited access something we should expect to see in the future.

As to the ticket price doubling from Friday to Saturday, Barrett-Jackson says it did this to encourage people to attend on Wednesday, Thursday, or Friday. “The City of Scottsdale has limitations on the number of people allowed [at one time],” said Black, and the increased ticket price for Saturday and Sunday was designed to, “Try to spread out the number of spectators,” rather than turning them away or making them wait outside until some people left.

This limitation on capacity, of course, raises the question of whether next year’s auction will be held in Scottsdale. In January of 2004, Barrett-Jackson generated about $72 Million in direct revenues for Scottsdale businesses. As we saw, however, the current location of the auction is stretched to its limits, and it doesn’t seem to have any room for expansion. I’ve already heard the complaints from people who traveled to Phoenix to attend on Saturday who said they will not go back because of the restriction on access to the showcase cars. Another rainy Saturday in the current Scottsdale location could have a serious negative effect on the auction attendance and its revenues.

Nonetheless, it’s easy to understand why Saturday attendees were angered by the restriction and threatening not to return next year. If I had driven 6 hours or traveled 2,000 miles as two commenters said they did and was not allowed to see the pavillion cars after paying $50 for admission, I would be frustrated, too. Then end result was that the weather really dampened the entire Saturday experience. And that can’t make anyone happy.