BILL ANALYSIS SENATE JUDICIARY COMMITTEE Senator Ellen M. Corbett, Chair 2009-2010 Regular Session AB 519 Assemblymember Duvall As Amended June 26, 2009 Hearing Date: July 14, 2009 Civil Code; Vehicle Code BCP:jd SUBJECT Vehicles: Towing Fees and Access Notice DESCRIPTION This bill would require towing companies to provide consumers with a "Towing Fees and Access Notice," codify the contents of that notice, and require the tower to provide an itemized invoice of all towing and storage fees. This bill would also define "documentation" that would entitle a person to possession of a vehicle, and provide that a lienholder (towing company) is not responsible for determining the authenticity of that documentation. This bill would further provide that a lienholder that releases a vehicle in compliance with various sections, or pursuant to a specified release, has no civil liability for any claim or dispute arising out of the release of the vehicle. BACKGROUND Existing law generally provides for three different types of tows - public, private property, and owner's request. Towing companies generally have a lien against the vehicle for costs related to towing, storage, or labor associated with recovery or load salvage of the vehicle. The different types of tows are as follows: Public tows are done at the request of a peace officer, traffic control officer, or parking control officer in various circumstances, such as when the vehicle impedes the flow of (more) AB 519 (Duvall) Page 2 of ? traffic or when the driver is arrested or cited for specific offenses. The charges for towing and storage related to a public tow are set by the law enforcement agency that requested the tow. Private property tows occur when a private property owner has a vehicle towed because it is illegally or improperly parked on their property, subject to specified conditions and procedures. The towing company is currently limited in what they can charge for towing and storage related to a private property tow by the rate approved by the law enforcement agency or the towing company's approved rate from the California Highway Patrol. Lastly, an owner's request tow occurs when a vehicle owner hires a tow-truck company to tow his or her vehicle. The rates for towing and storage related to this type of tow are generally established by mutual agreement between the requestor and the towing company but may be dictated by agreements established between the requestor's motor club and the tower. As the result of an 18 month collaborative effort, this bill would require towing companies to provide consumers with a Towing Fees and Access Notice, an itemized invoice of all towing and storage fees, and specify who is authorized to retrieve or inspect a towed vehicle. This bill would also immunize the towing companies from liability for releases under certain circumstances, and state that they are not responsible for determining the authenticity of specified documents. CHANGES TO EXISTING LAW 1. Existing law provides that every person has a lien dependent upon possession for the compensation to which the person is legally entitled for towing, storage, or labor associated with recovery or load salvage of a vehicle that has been authorized to be removed by a public agency, a private property owner, or registered owner of the vehicle. Existing law provides that no charge exceeding that for one day of storage may be imposed if, 24 hours or less after the vehicle is placed in storage, the vehicle is released. (Civ. Code Sec. 3068.1.) Existing law provides that if a request to release the vehicle is made and the appropriate fees are tendered and documentation establishing that the person requesting release is entitled to possession of the vehicle, or is the owner's AB 519 (Duvall) Page 3 of ? insurance representative, is presented within the initial 24 hours of storage, and the storage facility fails to comply with the request or is not open during business hours, then only one day's charge may be required to be paid until after the first business day. (Civ. Code Sec. 3068.1(a).) This bill would state that "documentation" that would entitle a person to possession of the vehicle includes, but is not limited to: a certificate of ownership; vehicle registration; information in possession of the lienholder including ownership information from the Department of Motor Vehicles (DMV); a facially valid registration found within the vehicle; or a notarized letter or statement from the legal or registered owner providing authorization to release to a particular person with a government-issued photographic identification card. This bill would provide that documentation which establishes that a person is the owner's insurance representative includes, but is not limited to, a faxed letter or other letter form the owner's insurance company. This bill would provide that a lienholder is not responsible for determining the authenticity of documentation specifically described above that establishes either a person's entitlement to possession or that a person is the owner's insurance representative. This bill would provide that if a lienholder releases a vehicle in compliance with Section 3068.1, various vehicle code sections, or if the vehicle is authorized for release by law enforcement or other governmental agency, the lienholder has no civil liability of any kind for any claim or dispute arising out of the release of the vehicle. 2. Existing law provides that a lien shall be extinguished and no lien sale may be conducted if the lienholder, after a written demand to inspect the vehicle by the legal owner or lessor, fails to permit the inspection by the legal owner or lessor, or his or her agent, within a period of time after that demand. (Civ. Code Sec. 3068.1.(d).) This bill would define "agent" as including, but not limited to, any person designated to inspect the vehicle by the request of the legal owner or lessor, in writing or by telephone to the lienholder. This bill would provide that a AB 519 (Duvall) Page 4 of ? lienholder is not responsible for determining the authenticity of documentation establishing a person's agency for purposes of inspection of a vehicle. 3. Existing law allows a peace officer or a regularly employed and salaried public agency employee who is engaged in directing traffic or enforcing parking laws and regulations, to remove a vehicle located within the territorial limits in which the officer or employee may act, under any of several specified circumstances. These circumstances include a vehicle being left unattended and constituting an obstruction to traffic, a vehicle that has been reported as stolen or embezzled, and a vehicle that is illegally parked and is blocking a private driveway or is preventing access by firefighting equipment to a fire hydrant. (Veh. Code. Sec. 22651.) This bill would codify the language of a "Towing Fees and Access Notice," which generally would inform consumers of the amounts a towing company may charge, rights they have prior to paying any towing or storage-related fees, the right to have their vehicle released, and other related information. The notice must be a standardized document plainly printed in no less than 10-point type. This bill would require a person that charges for towing to: post the Towing Fees and Access Notice in the office area and have copies readily available to the public; provide, upon request, a copy of the Towing Fees and Access Notice to any owner or operator of a towed or stored vehicle; and provide a distinct notice on an itemized invoice for any towing or storage charges that states "Upon request, you are entitled to receive a copy of the Towing Fees and Access Notice." This bill would provide that prior to receiving payment for any towing, recovery, or storage-related fees, a person shall provide an itemized invoice of actual charges to the vehicle owner or their agent. This bill would define "itemized invoice" as a document that contains specified information, including the name and identification number of the towing company, date service was initiated, vehicle description, the hourly rate, and a clear, itemized, detailed explanation of any additional services or fees. AB 519 (Duvall) Page 5 of ? This bill would state that prior to paying any towing, recovery, or storage-related fees, a vehicle owner or their agent shall have the right to all of the following: receive their personal property at no charge during normal business hours; receive their vehicle during the first 72 hours of storage and not pay a lien fee; request a copy of the Towing Fees and Access Notice; and be permitted to pay by cash or credit card, as specified. This bill would provide that any person who violates the above provisions is civilly liable to a registered owner or legal owner of the vehicle, or a registered owner's insurer, for up two times the amount charged, but limit liability at $500. This bill would exempt the towing or storage of a repossessed vehicle pursuant to the Collateral Recovery Act from its scope, and provide that the section does not relieve a person from the obligation to comply with the provision of any other law. COMMENT 1. Stated need for the bill According to the author, Towers are not licensed or professionally regulated in any way in California. Anyone with a business license and appropriate classification of drivers license can do tows. For those towers who elect to be on rotation lists for local law enforcement or CHP to use to find towers for accidents and other non-consensual tows, these towers need to abide by the provisions of their given contract. This bill attempts to put some predictability into the practices of and billing for towing, as well as penalties for noncompliant towers. This will help to clean up the industry, as bad actors are sullying the name of good ones. 2. Documentation required for release To provide greater clarity to towing companies and consumers, this bill would specify the documentation required for release of a vehicle, define agent, and provide that a lienholder is not AB 519 (Duvall) Page 6 of ? responsible for determining the authenticity of documents. a. Documentation and immunity Under existing law, every person who tows, stores, or otherwise contributes labor to the recovery of a vehicle is entitled to a lien on that vehicle for the compensation to which they are legally entitled. That lien is dependent upon possession, and existing law permits the lienholder to sell the vehicle at a lien sale if the lien is not satisfied within a period of time. When requesting the release of a vehicle from a lienholder, the requesting individual must present documentation establishing that they are entitled to possession. In an attempt to both protect consumers and provide greater direction to towing companies, this bill seeks to clarify what types of documentation are appropriate for the release of a vehicle. Specifically, this bill would provide that "documentation" that entitles a person to possession of a vehicle includes, but is not limited to, certain documents including a certificate of ownership, and that documentation which establishes that a person is the owner's insurance representative includes, but is not limited to, a faxed letter or other letter from the owner's insurance company. Staff notes that as of the writing of this analysis, the list of documents remains under discussion with the interested stakeholders involved in the formulation of this bill. Given the implications of adding additional documents to the list of "approved" documentation, the author should continue to work with the committee to ensure that the documents are indeed appropriate in light of the proposed immunity discussed below. To address liability concerns of tow operators as a result of the list of documentation that is deemed sufficient to release a vehicle, this bill would provide that a lienholder who releases a vehicle in compliance with various sections, or in compliance with a release by law enforcement or other governmental agency, has no civil liability for any claim or dispute arising out of the release. In support of that immunity provision, the bill's proponents state: The need for [the provision] arises from the conduct of rogue, tow-truck operators. These operators game the AB 519 (Duvall) Page 7 of ? system by erecting barriers to the release of towed vehicles. They demand documentation in certain forms or require the registered owner to appear, refusing to release the vehicle to spouses, children, or designated agents. Delay earns these operators more storage fees. Insurance companies pay these fees for vehicles damaged in accidents. Unjustified charges increase claims costs and apply pressure to increase insurance premiums. AB 519 describes the kinds of documentation that should result in tow-truck operators releasing vehicles to individuals and insurance companies. The documentation described is designed to minimize anyone scamming a tow-truck operator to release a vehicle to an unauthorized person. While the possibility of a scam has been minimized, it cannot be totally eliminated. For that reason, a tow-truck operator who releases a vehicle based on a document described is to be immune from liability for the release. Without immunity, the rogue operators will continue to insist on greater documentation to run up the charges. Granting immunity to tow-truck operators means that in most instances the risk of a vehicle being released to an unauthorized person falls on the insurance company that provides theft coverage. Those companies have concluded that on the benefit-risk continuum, securing the release with the described documents falls clearly on the benefit side. In fact, they state that the benefit, in terms of reduced storage fees and convenience for consumers, outweighs the risk by several orders of magnitude. The following amendment is suggested to clarify the immunity provision to ensure that it narrowly addresses the above issue of documentation. Clarifying amendment: On page 5, strike out lines 8 through 13, inclusive, and insert: (e) A lienholder shall not be liable for any claim or dispute directly arising out of the reliance on documentation specifically described in subdivision (a)(2) for purposes of releasing a vehicle. AB 519 (Duvall) Page 8 of ? b. Definition of agent Existing law further provides that a lien is extinguished if a lienholder fails to permit a vehicle to be inspected by the legal owner, lessor, or their agents, as specified. Similar to the above definitions, this bill would also provide that an "agent" includes any person designated to inspect the vehicle by the request of the legal owner or lessor, in writing or by telephone, to the lienholder. c. No responsibility to determine authenticity This bill would also provide that a lienholder (storage yard) is not responsible for determining the authenticity of documentation that establishes either a person's entitlement to possession, that a person is the owner's insurance representative, or an agent. Staff notes that that while tow operators and their storage yards are able to determine whether a document actually appears to be a certificate of ownership or a vehicle registration, those same entities may not be trained, or have the resources, to determine whether the document presented to them is completely authentic. 3. Statutory notice and itemized invoice In response to reports of frustration experienced by consumers and the towing and insurance companies, the author notes that various interested stakeholders have worked for 18 months to draw up and provide a "Towing Fees & Access Notice" to California consumers. This bill would require that notice to be posted in the office area of a storage facility, be provided upon request, and contain the language codified by this bill. The notice itself must be printed in no less than 10-point type and inform consumers about the amounts a towing company may charge, how to complain about a towing company, and would list the rights that a consumer has in the process. The Automobile Club of Southern California and AAA of Northern California, in support, contend that the notice represents a significant step forward in developing a comprehensive list of rights for consumers when their vehicle is towed or stored and that the information "will help alleviate the frustration felt by consumers who do not currently know the laws applicable to towing." The author similarly contends that as a result of the notice, "[c]onsumers will know exactly what to expect, exactly what questions to ask, and where to go to seek redress of any AB 519 (Duvall) Page 9 of ? improprieties." In addition to requiring the above notice to be provided, this bill would allow a vehicle owner or their agent, prior to paying any fees, to receive their personal property at no charge, retrieve their vehicle during the first 72 hours and not pay a lien fee, and pay by cash or credit card. This bill would also provide that prior to receiving payment for any towing, recovery, or storage-related fees, a person that charges for towing and storage must provide an itemized invoice of actual charges to the vehicle owner or their agent. That invoice must include specific information, including the location and description of the vehicle, service dispatch and completed time, separate line items for various fees, and a clear, itemized, and detailed explanation of any additional fees or services. 4. Opposition's concerns The California New Car Dealers Association (CNCDA), in opposition, state that their opposition would be removed if the bill were amended to eliminate the requirement that entities who "merely pay for a tow on behalf of a consumer, but who do not themselves provide a tow, provide the required notice." CNDA further states: While we greatly appreciate the author's willingness to hear our concerns, we regretfully have not resolved our issue which boils down to the following: should entities that merely pay for towing as a convenience for their repair customers-such as new car dealers and auto body shops-be put in the same position as towing companies when it comes to the posting and notice requirements of AB 519? We believe that the answer to this question is no. 5. Amendments The following amendments were accepted in the Senate Transportation and Housing Committee but were omitted due to an error by Legislative Counsel. a) On page 7, line 16, after "storage facility" insert: , at no charge, AB 519 (Duvall) Page 10 of ? b) On page 8, line 39, strike out "and any" and insert: . Any Support : Allstate Insurance Company; Association of California Insurance Companies; State Farm; Personal Insurance Federation of California; Automobile Club of Southern California; AAA of Northern California Opposition : California New Car Dealers Association HISTORY Source : Author Related Pending Legislation : None Known Prior Legislation : None Known Prior Vote : Assembly Transportation Committee (Ayes 14, Noes 0) Assembly Appropriations Committee (Ayes 16, Noes 0) Assembly Floor (Ayes 77, Noes 0) Senate Transportation and Housing Committee (Ayes 11, Noes 0) **************