1952); Eby v. Foremost Ins. Co., 374 P.2d 857 (Mont. 1962); Edwards v. Maryland. Motorcar Ins. Co., 197 N.Y.S. 460 204 A.D. 174 (N.Y.App.Div. 1922); Pierce v. Am. Fid. Fire Ins. Co., 83 S.E.2d 493 (N.C. 1954); Nat'l Farmers Union Prop. Cas. Co. v. Watson, 298 P.2d 762 (Okla. 1956); Dunmire Motor Co. v. Or.egon Mut. Fire Ins. Co., 114 P.2d 1005 (Ore. 1941); Campbell v. Calvert Fire Ins. Co., 109 S.E.2d 572 (S.C. 1959); Grubbs v. Foremost Ins. Co., 141 N.W.2d 777 (S.D. 1966); Senter v. Tenn. Farmers Mut. Ins. Co., 702 S.W.2d 175 (Tenn.Ct.App. 1985). For Texas cases, see Northwestern Nat'l Ins. Co. v. Cope, 448 S.W.2d 717 (Tex.Civ.App.-Corpus Christi 1969, no writ); Queen Ins. Co. of Am. v. Dominguez, 426 S.W.2d 286 (Tex.Civ.App.-San Antonio 1968), rev'd on other grounds, 434 S.W.2d 340 (Tex. 1968); (Tex.Civ.App.-Beaumont 1951, no writ); Higgins v. Stand.Standard Lloyds, 149 S.W.2d 143, 147 (Tex.Civ.App.-Galveston-Galveston 1941, writ dism'd w.o.j.). While Schaefer focuses on the "loss" language of the policy's insuring provision, AMM emphasizes the limitation of liability and payment provisions.

Compare Bailey v. Progressive County Mut. Ins. Co., No. 05-01-00822-CV, 2002 Tex. App. LEXIS 4105, at *5 (Dallas June 7, 2002, no pet. h.) (interpreting policy language of "repair" and "replace" to require restoration of vehicle to same value as that of vehicle prior to loss), with Carlton v. Trinity Univ. Ins. Co., 32 S.W.3d 454, 461 (Tex.App.-Houston [14th Dist.] 2000, pet. denied) (holding definition of repair does not include concept of value). Concluding this language is ambiguous as a matter of law, see New Ulm Gas, Ltd., 940 S.W.2d at 589, we are guided by Northwestern Nat'l Ins. Co. v. Cope, 448 S.W.2d 717, 719 (Tex.App.-Corpus Christi 1969, no writ) as to the meaning of "repair" and "replace" in an insurance policy. See id.

Although the words "repair or replace" are not defined in the insuring agreement, Texas courts have long held that, in an auto insurance policy, these words mean "the restoration of the automobile to substantially the same condition in which it was immediately prior" to the loss; the vehicle "would not be restored to the same condition if the repairs left the market value of the automobile substantially less than the value immediately" before the loss. See Northwestern Nat'l Ins. Co. v. Cope, 448 S.W.2d 717, 719 (Tex.Civ.App.-Corpus Christi 1969, no writ);Fid. Cas. Co. of N.Y. v. Underwood, 791 S.W.2d 635, 643 (Tex.App.-Dallas 1990, no writ); Queen Ins. Co. v. Dominguez, 426 S.W.2d 286, 289 (Tex.Civ.App.-San Antonio 1968), rev'd on other grounds, Superior Pontiac Co. v. Queen Ins. Co. of Am., 434 S.W.2d 340 (Tex. 1968); see also Great Tex. County Mut. Ins. Co. v. Lewis, 979 S.W.2d 72, 74 (Tex.App.-Austin 1998, no pet.) (finding the words "repair or replace" mean restoring to a condition substantially the same as that existing before the damage). In many of the cases where courts have awarded diminution in value, the damage giving rise to the diminished market value could be repaired.

This Court finds the better view to be that of the majority of jurisdictions, however, which hold that an insurer's provision to "repair or replace" a vehicle or its parts with "like kind and quality," requires that the insurer pay for diminution in value. See Dodson Aviation v. Rollins, Burdick, Hunter of Kansas, Inc., 15 Kan. App. 2d 314, 807 P.2d 1319, 1322 (1991); Venable v. Import Volkswagen, Inc., 214 Kan. 43, 519 P.2d 667, 673 (1974); Northwestern National Ins. Co. v. Cope, Tex.Civ.App., 448 S.W.2d 717, 719 (1969); Campbell v. Calvert Fire, 234 S.C. 583, 109 S.E.2d 572, 591-92 (1959). The underlying rationale for these decisions is essentially that in the context of an insurance contract, the words "repair or replace" with "like kind and quality" mean the restoration of the vehicle to substantially the same condition as prior to the damage; and restoration to such condition can not be said to have been effected if the repairs fail to render the vehicle as valuable as before.

More recently, the Beaumont Court of Appeals relied on Fidelity and a long history of Texas cases to reach a similar result. See Schaefer v. Am. Mfrs. Mut. Ins. Co., 65 S.W.3d 806 (Tex.App.-Beaumont 2002, no pet. h.); see also Superior Pontiac Co. v. Queen Ins. Co. of Am., 434 S.W.2d 340, 342 (Tex. 1968); Northwestern Nat'l Ins. Co. v. Cope, 448 S.W.2d 717, 719 (Tex. Civ. App.-Corpus Christi 1969, no writ); Smith v. Am. Fire Cas. Co., 242 S.W.2d 448, 453-54 (Tex. Civ. App.-Beaumont 1951, no writ). Therefore, in this case, Progressive was required to conclusively establish that it repaired the Baileys' vehicle to substantially the same value as it was prior to the loss.

Other courts which have addressed an insurer's obligation to repair, or replace with, a vehicle of "like kind and quality" have found the obligation violated if repairs leave the vehicle's market value substantially less than the market value it had immediately before the accident. See Boyd Motors, Inc. v. Employers Insurance, 880 F.2d 270 (10th Cir. 1989) (applying Kansas law); Delledonne v. State Farm Mutual Automobile Insurance Co., 621 A.2d 350 (Del.Super.Ct. 1992); United States Fire Insurance Co. v. Welch, 163 Ga. App. 480, 294 S.E.2d 713 (1982); Campbell v. Calvert Fire Insurance Co., 234 S.C. 583, 109 S.E.2d 572 (1959); Northwestern National Insurance Co. v. Cope, 448 S.W.2d 717 (Tex.Civ.App.l969). But see Johnson v. State Farm Mutual Automobile Insurance Co., 157 Ariz. 1, 754 P.2d 330 (Ariz.App. 1988) ("like kind and quality" contemplates restoration of physical condition rather than restoration of value); Ray v. Farmers Insurance Exchange, 200 Cal.App.3d 1411, 246 Cal.Rptr. 593 (1988) (same); General Accident Fire Life Assurance Corp. v. Judd, 400 S.W.2d 685 (Ky. 1966) (same).

Many of these cases are distinguishable because: (1) they relied on tort principles rather than contract principles; and/or (2) unlike the claims at issue in Carlton, Schaefer, and this case, they involved repair-related claims for diminished value or the actual-cash-value limitation of liability due to insurance-claims practices or the insurer's election under the limitation-of-liability provision. The Schaefer court relied upon the following cases: N.W. Nat'l Ins. Co. v. Cope, 448 S.W.2d 717, 719 (Tex.Civ.App. Corpus Christi 1969, no writ); Queen Ins. Co. v. Dominguez, 426 S.W.2d 286, 288-90 (Tex.Civ.App.-San Antonio 1968), rev'd on other grounds, Superior Pontiac Co. v. Queen Ins. Co. of Am., 434 S.W.2d 340, 341 (Tex. 1968); Calvert Fire Ins. Co. v. McClintic, 267 S.W.2d 568 (Tex.Civ.App.-Waco 1954, writ ref'd n.r.e.); Am. Std. County Mut. Ins. Co. v. Barbee, 262 S.W.2d 122, 123-24 (Tex.Civ.App.-Fort Worth 1953, no writ), rev'd on other grounds by Luna v. North Star Dodge Sales, Inc., 667 S.W.2d 115 (Tex. 1984); Stuyvesant Ins. Co. v. Driskill, 244 S.W.2d 291, 292-93 (Tex.Civ.App.-Fort Worth 1951, no writ); Mut. Fire Auto. Ins. Co. v. Muckelroy, 236 S.W.2d 555, 557 (Tex.Civ.App.-San Antonio 1951, no writ); Roberdeau v. Indem. Ins. Co. of N. Am., 231 S.W.2d 948, 951 (Tex.Civ.App.-Austin 1950, writ ref'd n.r.e.); Higgins v. Standard Lloyds, 149 S.W.2d 143 (Tex.Civ.App.-Galveston 1941, writ dism'd) (op. on reh'g); Bankers Shippers Ins. Co. of N.Y. v. Ellis Green Motor Co., 102 S.W.2d 294 (Tex.Civ.App.-El Paso 1937, writ

The Carlton court rejected or distinguished earlier Texas cases in which the courts held that diminished value was recoverable. See Fidelity Cas. Co. of New York v. Underwood, 791 S.W.2d 635 (Tex.App. 1990) (evidence indicated that insured was entitled to difference in market value before and after car was stolen and found submerged in lake);Northwestern Nat'l Ins. Co. v. Cope, 448 S.W.2d 717 (Tex.Civ.App. 1969) (proper measure of damages was difference in value of car immediately before and immediately after collision where essentially new car was worth only $27 more than repair costs after collision); Queen Ins. Co. of America v. Dominguez, 426 S.W.2d 286 (Tex.Civ.App. 1968), rev'd on other grounds, 434 S.W.2d 340 (Tex. 1968) (where repairs do not substantially restore the substantially damaged automobile to its former condition, the cost of repairs alone is not the proper measure of damages); American Standard County Mut. Ins. Co. v. Barbee, 262 S.W.2d 122 (Tex.Civ.App. 1953) (proper measure of damages was difference in value of automobile before it was wrecked and after it was wrecked, repaired, and returned to plaintiff); Stuyvesant Ins. Co. v. Driskill, 244 S.W.2d 291 (Tex.Civ.App. 1951) (if the automobile had been repaired and returned, the proper measure of damages would have been the difference between the value of the car before it was stolen, and the value after it was stolen, reco

Since our decision in Smith, the following cases have been decided and support our precedent. See Northwestern Nat'l Ins. Co. v. Cope, 448 S.W.2d 717, 719 (Tex.Civ.App.-Corpus Christi 1969, no writ); Queen Ins. Co. v. Dominguez, 426 S.W.2d 286, 288-90 (Tex.Civ.App.-San Antonio 1968), rev'd on other grounds, Superior Pontiac Co. v. Queen Ins. Co. of Am., 434 S.W.2d 340, 341 (Tex. 1968); Calvert Fire Ins. Co. v. McClintic, 267 S.W.2d 568 (Tex.Civ.App.-Waco 1954, writ ref'd n.r.e.); American Standard County Mut. Ins. Co. v. Barbee, 262 S.W.2d 122, 123-24 (Tex.Civ.App.-Fort Worth 1953, no writ); and Stuyvesant Ins. Co. v. Driskill,, 244 S.W.2d 291, 292-93 (Tex.Civ.App.-Fort Worth 1951, no writ). Of special note is the decision by the Supreme Court of Texas in Superior Pontiac Co. v. Queen Ins. Co. of America, where in this case, the plaintiff introduced evidence that the repair sum tendered by the insurer would not compensate her for the loss suffered. Id. at 341-42.

Other courts which have addressed an insurer's obligation to repair, or replace with, a vehicle of "like kind and quality" have found the obligation violated if repairs leave the vehicle's market value substantially less than the market value it had immediately before the accident. See Boyd Motors, Inc. v. Employers Insurance, 880 F.2d 270 (10th Cir. 1989) (applying Kansas law); Delledonne v. State Farm Mutual Automobile Insurance Co., 621 A.2d 350 (Del.Super.Ct. 1992); United States Fire Insurance Co. v. Welch, 163 Ga. App. 480, 294 S.E.2d 713 (1982); Campbell v. Calvert Fire Insurance Co., 234 S.C. 583, 109 S.E.2d 572 (1959);Northwestern National Insurance Co. v. Cope, 448 S.W.2d 717 (Tex.Civ.App. 1969). But see Johnson v. State Farm Mutual Automobile Insurance Co., 157 Ariz. 1, 754 P.2d 330 (Ariz.App. 1988) ("like kind and quality" contemplates restoration of physical condition rather than restoration of value); Ray v. Farmers Insurance Exchange, 200 Cal.App.3d 1411, 246 Cal.Rptr. 593 (1988) (same);General Accident Fire Life Assurance Corp. v. Judd, 400 S.W.2d 685 (Ky. 1966) (same).