I'm facing the exact same issue. The HD in my MacMini has become corrupted and my only option is to erase it, but, in a fit of security consciousness, I encrypted it with FileVault and so Disk Utility won't erase it at all.
So, not caring about the data on that MacMini (it's just my TV server, nothing that cant be reinstalled and all the actual data is on an external drive) I've booted it in
target disk mode (hold down
t when you start it up and connect it via FireWire to another Mac) then fire up your Terminal.
diskutil cs list to get the the Logical Volume Group ID
diskutil cs delete XXXXXXXXXXXXXXXXXXXXXXXXXXXX <-- put the Logical Volume Group ID in place of the Xs
In my case it said
The Core Storage Logical Volume Group UUID is 48AE3F70-916B-4BEB-AF63-0C2423E1481E
Started CoreStorage operation
Ejecting Logical Volumes
Destroying Logical Volume Group
Error: -69783: Unable to delete the CoreStorage Logical Volume Group
You can safely ignore the error however. When I then fired up Disk Utility there was my disk - newly erased. I will now reboot my iMac in Recovery Disk mode and re-install Mavericks on the MacMini. (Fingers crossed)