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  
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          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  
                                                                      



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            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  
                                                                      



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            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.

                                                                      



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             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  
                                                                      



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          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  
                                                                      



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               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.

                                                                      



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            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  
                                                                      



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          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,

                                                                      



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          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)

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