Sunday, July 13, 2008

Additional Proof Required in Challenge to Garageman's Lien

Matter of GMAC v. ACME Towing Inc.
(Sup. Ct., Albany Co., decided 7/2/2008)

This isn't really a coverage case, strictly speaking, but it relates to an issue that frequently arises in the payment of physical damage coverages, namely, how much auto towing and storage facilities are allowed to charge for their services.

Some municipalities in New York State have regulated towing and storage charges, but the majority have not. It is in those municaplities and counties in which there are no regulations that auto insurers are most challenged in dealing with and settling the charges of towing and storage facilities. This case represents one insurer's challenge to such charges.

GMAC commenced this CPLR article 4 special proceeding seeking a declaration of the validity and amount of the garageman's lien claimed by respondent ACME Towing, Inc., on a 2002 Cadillac. ACME answered, claiming its lien on the 2002 Cadillac was in all respects valid and totaled $14,395.22, as of January 12,2008, which continued to accrue storage charges at rate of $18.42 per day.

Albany County Surpeme Court Justice Joseph Teresi pointed out:

A garageman's lien accrues pursuant to Lien Law §184. The Court of Appeals stated: "[t]he statute clearly inures to the benefit of a garage owner who can establish the following elements: (1) the garage is the bailee of a motor vehicle, ... (2) it has performed garage services or stored the vehicle with the vehicle owner's consent, ...(3) there was an agreed-upon price or, if no agreement on price had been reached, the charges are reasonable for the services supplied, ... and (4) the garage is a duly registered motor vehicle repair shop as required under article 12-A of the Vehicle and Traffic Law".
Although ACME produced what it claimed was a signed "Authorization to Tow" which proved elements 1-3, there was insufficient proof to either confirm or refute that ACME was a "duly registered motor vehicle repair shop", and GMAC submitted proof that created questions of fact on whether ACME released possession of the vehicle back to the vehicle's owner or whether ACME and the owner were colluding in submitted a "bogus lien claim." On these issues, the court directed the parties to submit additional proof.

With respect to ACME's claim of "miscellaneous/processing" fees in its Notice of Lien and Sale, Justice Teresi held:
Lien Law §203 specifically authorizes such legitimate expenses of the lienor to be collected upon a "redemption before sale". As such, the "miscellaneous/processing" fees are not included in the lien amount, however, are legitimate charges to the person or entity redeeming the vehicle prior to sale.
That presumes, of course, that there was a legitmate sale and redemption prior to sale.

If the outcome of GMAC's special proceeding is reported, I'll post a follow up.

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