Date: 03/06/2014
Final
BILL SUMMARY for HB14-1187
HOUSE COMMITTEE ON JUDICIARY
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03:38 PM -- HB14-1187
Representative Swalm, prime sponsor, presented House Bill 14-1187, concerning consumer protection from excess damages for repair of rental vehicles. Representative Swalm explained the effect of the bill, and discussed its need. Representative Swalm discussed a Colorado Supreme Court case involving a rental car involved in an accident where the rental company charged the renter for costs in excess of the damages to the car plus verifiable lost income. Representative Swalm discussed the outcome of the case and its implications. In response to questions, Representative Swalm further clarified the effect of the bill. Representative Swalm responded to further questions about the bill's treatment of the diminished value of a damaged car.
03:50 PM
The following persons testified regarding House Bill 14-1187:
03:50 PM -- Mr. Brendan Powers, representing State Farm Insurance, consumers, and the Colorado Defense Lawyers' Association, testified in support of the bill. Mr. Powers explained that he considers the bill to be a consumer protection bill, and discussed the cost recovery guidelines for car renters contained in the bill. He outlined the car rental process, and provided an overview of the Supreme Court case discussed earlier. Mr. Powers responded to questions regarding the bill's impact on loss-of-use claims by rental car companies. Mr. Powers returned to discussing the Supreme Court case. Mr. Powers discussed some cases he has litigated involving large recoveries for repairs to rental cars and associated costs, and the potential for rental car companies to abuse the cost recovery process.
04:08 PM
Mr. Powers continued to discuss potential abuses by rental car agencies in the damage cost recovery process. Mr. Powers discussed the potential impact of these collections operations on consumers, and ways in which rental companies grow claims against consumers who have damaged rental cars. Mr. Powers discussed the agreements that consumers must enter into to acquire rental cars, and the utility of damage insurance offered by rental car companies in certain situations. Mr. Powers discussed the types of damage to cars for which rental car companies seek diminished value claims.
04:22 PM
Mr. Powers responded to questions regarding the ability of rental car companies to recover certain costs under the bill. Mr. Powers responded to additional questions regarding recovery of loss-of-use claims under the bill. He stated that the bill is a simple, straight-forward solution to a very complicated problem. He discussed other states' laws on this issue. He rebutted possible claims that the bill would affect rental rates.
04:29 PM
Representative Lawrence spoke about the length of time required for repairs. Mr. Powers said that fleet companies may have different experiences and wait times at repair shops than private individuals. Discussion continued between Representative Lawrence and Mr. Powers, with Representative Lawrence noting that she is a fleet owner. Representative Swalm asked Mr. Powers to address concerns that language in the bill related to "reasonable" and "rational" damages may create uncertainty and litigation. Mr. Powers spoke about the benefits of this language for consumers. He continued to discuss how similar laws operate in other states.
04:34 PM
Representative Gardner discussed his reaction to a case that Mr. Powers previously described. He explained his impression of how the bill relates to that case. Mr. Powers responded to Representative Gardner's remarks. Mr. Powers discussed what he views to be the self-regulating nature of the bill.
04:38 PM -- Mr. Stephen Christiansen and Mr. David Purinton, both representing PurCo Fleet Services, Inc., testified in opposition to the bill. Mr. Christiansen spoke about his involvement in the cases that Mr. Powers discussed. Mr. Purinton provided an overview of PurCo Fleet Services, Inc., and then moved on to a discussion of litigation on this issue. He spoke about coverage that already exists for the situations addressed by the bill. Mr. Purinton listed his concerns with the bill. He discussed the effects of repairs on the value of a car. Mr. Purinton suggested that the cases discussed during earlier testimony may constitute fraud and other crimes, and addressed other issues raised during this testimony.
04:48 PM
Mr. Purinton discussed the facts of the Supreme Court case previously referenced. He responded to questions regarding loss-of-use charges levied by rental car companies during the damages recovery process, and the rate at which loss-of-use recoveries should be allowed. Mr. Purinton responded to questions regarding how his company generates income, and the rates charged by the company.
05:02 PM
Discussion ensued regarding the Supreme Court case and the fact pattern involved. Representative McLachlan discussed a case he litigated involving extensive damage to a rental car and resulting loss-of-use charges. Mr. Purinton responded to questions regarding the availability of loss-of-use coverage when a person rents a car and opts for insurance. Mr. Purinton responded to questions regarding the inability of rental car companies to recover loss-of-use costs in California.
05:13 PM
Discussion ensued regarding the formula contained in House Bill 14-1187 for tallying damage recovery by rental car companies, and the implications of the Supreme Court case with respect to this formula. Discussion followed regarding the requirement in the bill that damage recoveries by rental car companies must be "reasonably and rationally" related to the actual loss incurred. Mr. Christiansen clarified the concept of loss of use, and provided an example of loss of use.
05:24 PM
Mr. Christiansen responded to questions regarding the loss-of-use doctrine in the rental car environment. Discussion ensued regarding the propriety of the General Assembly addressing diminution of value for rental cars. Discussion returned to the facts of the referenced Supreme Court case.
05:31 PM -- Mr. Jeff Jenkins, representing Enterprise Holdings Inc., testified in opposition to House Bill 14-1187. Mr. Jenkins read testimony providing background on the economics associated with operating a rental car fleet, and outlined some proposed changes to the bill. He discussed the costs in both time and money associated with repairing rental cars. Mr. Jenkins responded to questions regarding the eight-hour benchmark contained in the bill's rental car cost recovery formula, and the potential for amending this benchmark.
05:43 PM
Discussion ensued regarding the origins of the "reasonable and rational" doctrine contained in the bill. Mr. Jenkins returned to expressing concerns with House Bill 14-1187, and proposing amendments to the bill. Mr. Jenkins discussed the potential impact of the bill on rental car rates and insurance rates. Mr. Jenkins responded to questions regarding the rate at which rental car damages go unpaid, and the impact of the nonpayment of these damages. Mr. Jenkins discussed the potential impact of the bill on the rental car industry. Representative McLachlan discussed a claim for damages for a car he rented. Discussion ensued regarding the potential for amending the administrative cost provision in the bill.
05:55 PM
Mr. Jenkins responded to questions regarding his previous assertion that House Bill 14-1187 constitutes an attack on the rental car industry. Mr. Jenkins responded to further questions regarding the work that goes into repairing a rental car, and the administrative costs associated with these repairs.
06:00 PM -- Ms. Linda Springer, representing State Farm Insurance, testified in support of the bill. Ms. Springer discussed the types of insurance available to rental car customers. Ms. Springer responded to questions regarding the ability of rental car companies to recover diminution of value on damaged rental cars under the bill. Discussion ensued regarding this point. Ms. Springer responded to questions regarding the administrative costs incurred by insurance companies when investigating rental car damage claims, and the allowance of diminution of value claims in California. Discussion followed regarding the recovery of diminution of value by rental car companies.
06:08 PM
No amendments were offered to House Bill 14-1187. Representative Swalm provided closing remarks in support of the bill, and addressed the recovery of diminution of value provision in bill. He also addressed issues raised during testimony. Committee members provided their positions on the bill. Discussion ensued regarding the ability of rental car companies to recover diminution of value on damaged cars under the bill.
06:20 PM
The committee continued to discuss the merits of House Bill 14-1187. Discussion ensued regarding the potential for laying the bill over for further exploration of certain issues.
06:25 PM
House Bill 14-1187 was laid over until March 11 for action only.
06:28 PM
The committee adjourned.